72
® Simpler ® Simpler …Building Strategic Advantage through Enterprise Wide Improvement… © 1996-2008 Simpler Business System® 11.0 © Simpler Consulting, LP 1996-2008 ALL RIGHTS RESERVED For the Express Use of Simpler Members and Simpler Clients SBS Presentation Leading the Lean Enterprise Transformation

SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

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Page 1: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

regSimpler regSimpler

hellipBuilding Strategic Advantage through Enterprise Wide Improvementhellip

copy 1996-2008 Simpler Business Systemreg 110copy Simpler Consulting LP 1996-2008 ALL RIGHTS RESERVEDFor the Express Use of Simpler Members and Simpler Clients

SBS PresentationLeading the Lean Enterprise Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

MAJOR THEMES

EXPECTATIONS amp MEASUREMENTS

LEAN LEADERSHIP CHALLENGES

ORGANIZING FOR LEAN SUCCESS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

What is LeanThe Two Pillars of Lean ndash ldquoTrue Northrdquo

CO

NTI

NU

OU

S IM

PRO

VEM

ENT

RES

PEC

T FO

R P

EOPL

E

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

What is Lean

Identification of Waste

Removal of Waste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

5

Operating Room Waste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

6

Operating Room ndash Improved Flow

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

What is Lean

Current State

Improved State

Solve Problems

ExposeProblems

ldquoOur own attitude is that we are chartered with discovering the best way of doing everything and that we must regard every process employed in the business as purely experimentalrdquo Henry Ford

ldquoTrue NorthrdquoValue Added Time = Lead Time

At Local LevelWith ldquoGuidancerdquo

ldquoImprovement with Guidancerdquo

ldquoIf you assume that things are all right the way they are you canrsquot do Kaizenrdquo Tiichi Ohno

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

8

Toyota WayT

QC

TP

S

Human DevelopmentbullEverything in TQC begins with awareness of the customerbullOur ultimate goal in TQC is to earn customer satisfactionbullWe at Toyota come to TQC with the frank admission that we had problems with qualitybullTQC helped Toyota become a pioneering winner of the Deming Prize in 1961

Masao Nemoto Senior Managing Deputy Toyota Motors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson One

Value Stream Analysis Provides the Improvement

Plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion

Current State

Business CaseIncrease production efficiency

Decrease delays for patient

Capitol Cost Avoidance

Value StatementProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPH

Technician Involvement

USP Compliant

Order from Doctor

MeasurementsCost Avoidance Rent Reduction

Reduced Inventory $

Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND

DEFECT FREE1 BY 1

LOWEST COST

Go to the Gemba

Walk the Gembutsu

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Maps

Area Home IV InfusionIdeal State

BUSINESS CASEIncrease production efficiency Decrease delays for patient Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

KEY REQUIREMENTSRPH Technician Involvement USP CompliantOrder from Doctor

MEASUREMENTCost Avoidance Rent Reduction

Reduced Inventory $ Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND DEFECT FREE 1 BY 1 LOWEST COST

Focus = Just the Value Added

Learning = Begin to ldquoSee Wasterdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion Future StateBUSINESS CASE

Increase production efficiency

Decrease delays for patient

Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPHTechnician InvolvementUSP CompliantOrder from Doctor

MEASUREMENTSCost Avoidance Rent Reduction

Reduced Inventory $Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMANDDEFECT FREE1 BY 1LOWEST COST

The 6-18 month improvement plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Two

Think 5X

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

OLD PROCESS

Typical Process = 23 VA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 2: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

MAJOR THEMES

EXPECTATIONS amp MEASUREMENTS

LEAN LEADERSHIP CHALLENGES

ORGANIZING FOR LEAN SUCCESS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

What is LeanThe Two Pillars of Lean ndash ldquoTrue Northrdquo

CO

NTI

NU

OU

S IM

PRO

VEM

ENT

RES

PEC

T FO

R P

EOPL

E

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

What is Lean

Identification of Waste

Removal of Waste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

5

Operating Room Waste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

6

Operating Room ndash Improved Flow

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

What is Lean

Current State

Improved State

Solve Problems

ExposeProblems

ldquoOur own attitude is that we are chartered with discovering the best way of doing everything and that we must regard every process employed in the business as purely experimentalrdquo Henry Ford

ldquoTrue NorthrdquoValue Added Time = Lead Time

At Local LevelWith ldquoGuidancerdquo

ldquoImprovement with Guidancerdquo

ldquoIf you assume that things are all right the way they are you canrsquot do Kaizenrdquo Tiichi Ohno

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

8

Toyota WayT

QC

TP

S

Human DevelopmentbullEverything in TQC begins with awareness of the customerbullOur ultimate goal in TQC is to earn customer satisfactionbullWe at Toyota come to TQC with the frank admission that we had problems with qualitybullTQC helped Toyota become a pioneering winner of the Deming Prize in 1961

Masao Nemoto Senior Managing Deputy Toyota Motors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson One

Value Stream Analysis Provides the Improvement

Plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion

Current State

Business CaseIncrease production efficiency

Decrease delays for patient

Capitol Cost Avoidance

Value StatementProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPH

Technician Involvement

USP Compliant

Order from Doctor

MeasurementsCost Avoidance Rent Reduction

Reduced Inventory $

Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND

DEFECT FREE1 BY 1

LOWEST COST

Go to the Gemba

Walk the Gembutsu

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Maps

Area Home IV InfusionIdeal State

BUSINESS CASEIncrease production efficiency Decrease delays for patient Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

KEY REQUIREMENTSRPH Technician Involvement USP CompliantOrder from Doctor

MEASUREMENTCost Avoidance Rent Reduction

Reduced Inventory $ Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND DEFECT FREE 1 BY 1 LOWEST COST

Focus = Just the Value Added

Learning = Begin to ldquoSee Wasterdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion Future StateBUSINESS CASE

Increase production efficiency

Decrease delays for patient

Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPHTechnician InvolvementUSP CompliantOrder from Doctor

MEASUREMENTSCost Avoidance Rent Reduction

Reduced Inventory $Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMANDDEFECT FREE1 BY 1LOWEST COST

The 6-18 month improvement plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Two

Think 5X

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

OLD PROCESS

Typical Process = 23 VA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 3: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

What is LeanThe Two Pillars of Lean ndash ldquoTrue Northrdquo

CO

NTI

NU

OU

S IM

PRO

VEM

ENT

RES

PEC

T FO

R P

EOPL

E

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

What is Lean

Identification of Waste

Removal of Waste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

5

Operating Room Waste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

6

Operating Room ndash Improved Flow

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

What is Lean

Current State

Improved State

Solve Problems

ExposeProblems

ldquoOur own attitude is that we are chartered with discovering the best way of doing everything and that we must regard every process employed in the business as purely experimentalrdquo Henry Ford

ldquoTrue NorthrdquoValue Added Time = Lead Time

At Local LevelWith ldquoGuidancerdquo

ldquoImprovement with Guidancerdquo

ldquoIf you assume that things are all right the way they are you canrsquot do Kaizenrdquo Tiichi Ohno

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

8

Toyota WayT

QC

TP

S

Human DevelopmentbullEverything in TQC begins with awareness of the customerbullOur ultimate goal in TQC is to earn customer satisfactionbullWe at Toyota come to TQC with the frank admission that we had problems with qualitybullTQC helped Toyota become a pioneering winner of the Deming Prize in 1961

Masao Nemoto Senior Managing Deputy Toyota Motors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson One

Value Stream Analysis Provides the Improvement

Plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion

Current State

Business CaseIncrease production efficiency

Decrease delays for patient

Capitol Cost Avoidance

Value StatementProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPH

Technician Involvement

USP Compliant

Order from Doctor

MeasurementsCost Avoidance Rent Reduction

Reduced Inventory $

Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND

DEFECT FREE1 BY 1

LOWEST COST

Go to the Gemba

Walk the Gembutsu

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Maps

Area Home IV InfusionIdeal State

BUSINESS CASEIncrease production efficiency Decrease delays for patient Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

KEY REQUIREMENTSRPH Technician Involvement USP CompliantOrder from Doctor

MEASUREMENTCost Avoidance Rent Reduction

Reduced Inventory $ Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND DEFECT FREE 1 BY 1 LOWEST COST

Focus = Just the Value Added

Learning = Begin to ldquoSee Wasterdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion Future StateBUSINESS CASE

Increase production efficiency

Decrease delays for patient

Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPHTechnician InvolvementUSP CompliantOrder from Doctor

MEASUREMENTSCost Avoidance Rent Reduction

Reduced Inventory $Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMANDDEFECT FREE1 BY 1LOWEST COST

The 6-18 month improvement plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Two

Think 5X

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

OLD PROCESS

Typical Process = 23 VA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 4: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

What is Lean

Identification of Waste

Removal of Waste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

5

Operating Room Waste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

6

Operating Room ndash Improved Flow

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

What is Lean

Current State

Improved State

Solve Problems

ExposeProblems

ldquoOur own attitude is that we are chartered with discovering the best way of doing everything and that we must regard every process employed in the business as purely experimentalrdquo Henry Ford

ldquoTrue NorthrdquoValue Added Time = Lead Time

At Local LevelWith ldquoGuidancerdquo

ldquoImprovement with Guidancerdquo

ldquoIf you assume that things are all right the way they are you canrsquot do Kaizenrdquo Tiichi Ohno

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

8

Toyota WayT

QC

TP

S

Human DevelopmentbullEverything in TQC begins with awareness of the customerbullOur ultimate goal in TQC is to earn customer satisfactionbullWe at Toyota come to TQC with the frank admission that we had problems with qualitybullTQC helped Toyota become a pioneering winner of the Deming Prize in 1961

Masao Nemoto Senior Managing Deputy Toyota Motors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson One

Value Stream Analysis Provides the Improvement

Plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion

Current State

Business CaseIncrease production efficiency

Decrease delays for patient

Capitol Cost Avoidance

Value StatementProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPH

Technician Involvement

USP Compliant

Order from Doctor

MeasurementsCost Avoidance Rent Reduction

Reduced Inventory $

Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND

DEFECT FREE1 BY 1

LOWEST COST

Go to the Gemba

Walk the Gembutsu

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Maps

Area Home IV InfusionIdeal State

BUSINESS CASEIncrease production efficiency Decrease delays for patient Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

KEY REQUIREMENTSRPH Technician Involvement USP CompliantOrder from Doctor

MEASUREMENTCost Avoidance Rent Reduction

Reduced Inventory $ Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND DEFECT FREE 1 BY 1 LOWEST COST

Focus = Just the Value Added

Learning = Begin to ldquoSee Wasterdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion Future StateBUSINESS CASE

Increase production efficiency

Decrease delays for patient

Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPHTechnician InvolvementUSP CompliantOrder from Doctor

MEASUREMENTSCost Avoidance Rent Reduction

Reduced Inventory $Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMANDDEFECT FREE1 BY 1LOWEST COST

The 6-18 month improvement plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Two

Think 5X

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

OLD PROCESS

Typical Process = 23 VA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 5: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

5

Operating Room Waste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

6

Operating Room ndash Improved Flow

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

What is Lean

Current State

Improved State

Solve Problems

ExposeProblems

ldquoOur own attitude is that we are chartered with discovering the best way of doing everything and that we must regard every process employed in the business as purely experimentalrdquo Henry Ford

ldquoTrue NorthrdquoValue Added Time = Lead Time

At Local LevelWith ldquoGuidancerdquo

ldquoImprovement with Guidancerdquo

ldquoIf you assume that things are all right the way they are you canrsquot do Kaizenrdquo Tiichi Ohno

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

8

Toyota WayT

QC

TP

S

Human DevelopmentbullEverything in TQC begins with awareness of the customerbullOur ultimate goal in TQC is to earn customer satisfactionbullWe at Toyota come to TQC with the frank admission that we had problems with qualitybullTQC helped Toyota become a pioneering winner of the Deming Prize in 1961

Masao Nemoto Senior Managing Deputy Toyota Motors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson One

Value Stream Analysis Provides the Improvement

Plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion

Current State

Business CaseIncrease production efficiency

Decrease delays for patient

Capitol Cost Avoidance

Value StatementProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPH

Technician Involvement

USP Compliant

Order from Doctor

MeasurementsCost Avoidance Rent Reduction

Reduced Inventory $

Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND

DEFECT FREE1 BY 1

LOWEST COST

Go to the Gemba

Walk the Gembutsu

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Maps

Area Home IV InfusionIdeal State

BUSINESS CASEIncrease production efficiency Decrease delays for patient Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

KEY REQUIREMENTSRPH Technician Involvement USP CompliantOrder from Doctor

MEASUREMENTCost Avoidance Rent Reduction

Reduced Inventory $ Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND DEFECT FREE 1 BY 1 LOWEST COST

Focus = Just the Value Added

Learning = Begin to ldquoSee Wasterdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion Future StateBUSINESS CASE

Increase production efficiency

Decrease delays for patient

Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPHTechnician InvolvementUSP CompliantOrder from Doctor

MEASUREMENTSCost Avoidance Rent Reduction

Reduced Inventory $Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMANDDEFECT FREE1 BY 1LOWEST COST

The 6-18 month improvement plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Two

Think 5X

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

OLD PROCESS

Typical Process = 23 VA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 6: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

6

Operating Room ndash Improved Flow

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

What is Lean

Current State

Improved State

Solve Problems

ExposeProblems

ldquoOur own attitude is that we are chartered with discovering the best way of doing everything and that we must regard every process employed in the business as purely experimentalrdquo Henry Ford

ldquoTrue NorthrdquoValue Added Time = Lead Time

At Local LevelWith ldquoGuidancerdquo

ldquoImprovement with Guidancerdquo

ldquoIf you assume that things are all right the way they are you canrsquot do Kaizenrdquo Tiichi Ohno

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

8

Toyota WayT

QC

TP

S

Human DevelopmentbullEverything in TQC begins with awareness of the customerbullOur ultimate goal in TQC is to earn customer satisfactionbullWe at Toyota come to TQC with the frank admission that we had problems with qualitybullTQC helped Toyota become a pioneering winner of the Deming Prize in 1961

Masao Nemoto Senior Managing Deputy Toyota Motors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson One

Value Stream Analysis Provides the Improvement

Plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion

Current State

Business CaseIncrease production efficiency

Decrease delays for patient

Capitol Cost Avoidance

Value StatementProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPH

Technician Involvement

USP Compliant

Order from Doctor

MeasurementsCost Avoidance Rent Reduction

Reduced Inventory $

Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND

DEFECT FREE1 BY 1

LOWEST COST

Go to the Gemba

Walk the Gembutsu

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Maps

Area Home IV InfusionIdeal State

BUSINESS CASEIncrease production efficiency Decrease delays for patient Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

KEY REQUIREMENTSRPH Technician Involvement USP CompliantOrder from Doctor

MEASUREMENTCost Avoidance Rent Reduction

Reduced Inventory $ Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND DEFECT FREE 1 BY 1 LOWEST COST

Focus = Just the Value Added

Learning = Begin to ldquoSee Wasterdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion Future StateBUSINESS CASE

Increase production efficiency

Decrease delays for patient

Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPHTechnician InvolvementUSP CompliantOrder from Doctor

MEASUREMENTSCost Avoidance Rent Reduction

Reduced Inventory $Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMANDDEFECT FREE1 BY 1LOWEST COST

The 6-18 month improvement plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Two

Think 5X

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

OLD PROCESS

Typical Process = 23 VA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 7: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

What is Lean

Current State

Improved State

Solve Problems

ExposeProblems

ldquoOur own attitude is that we are chartered with discovering the best way of doing everything and that we must regard every process employed in the business as purely experimentalrdquo Henry Ford

ldquoTrue NorthrdquoValue Added Time = Lead Time

At Local LevelWith ldquoGuidancerdquo

ldquoImprovement with Guidancerdquo

ldquoIf you assume that things are all right the way they are you canrsquot do Kaizenrdquo Tiichi Ohno

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

8

Toyota WayT

QC

TP

S

Human DevelopmentbullEverything in TQC begins with awareness of the customerbullOur ultimate goal in TQC is to earn customer satisfactionbullWe at Toyota come to TQC with the frank admission that we had problems with qualitybullTQC helped Toyota become a pioneering winner of the Deming Prize in 1961

Masao Nemoto Senior Managing Deputy Toyota Motors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson One

Value Stream Analysis Provides the Improvement

Plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion

Current State

Business CaseIncrease production efficiency

Decrease delays for patient

Capitol Cost Avoidance

Value StatementProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPH

Technician Involvement

USP Compliant

Order from Doctor

MeasurementsCost Avoidance Rent Reduction

Reduced Inventory $

Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND

DEFECT FREE1 BY 1

LOWEST COST

Go to the Gemba

Walk the Gembutsu

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Maps

Area Home IV InfusionIdeal State

BUSINESS CASEIncrease production efficiency Decrease delays for patient Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

KEY REQUIREMENTSRPH Technician Involvement USP CompliantOrder from Doctor

MEASUREMENTCost Avoidance Rent Reduction

Reduced Inventory $ Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND DEFECT FREE 1 BY 1 LOWEST COST

Focus = Just the Value Added

Learning = Begin to ldquoSee Wasterdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion Future StateBUSINESS CASE

Increase production efficiency

Decrease delays for patient

Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPHTechnician InvolvementUSP CompliantOrder from Doctor

MEASUREMENTSCost Avoidance Rent Reduction

Reduced Inventory $Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMANDDEFECT FREE1 BY 1LOWEST COST

The 6-18 month improvement plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Two

Think 5X

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

OLD PROCESS

Typical Process = 23 VA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 8: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

8

Toyota WayT

QC

TP

S

Human DevelopmentbullEverything in TQC begins with awareness of the customerbullOur ultimate goal in TQC is to earn customer satisfactionbullWe at Toyota come to TQC with the frank admission that we had problems with qualitybullTQC helped Toyota become a pioneering winner of the Deming Prize in 1961

Masao Nemoto Senior Managing Deputy Toyota Motors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson One

Value Stream Analysis Provides the Improvement

Plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion

Current State

Business CaseIncrease production efficiency

Decrease delays for patient

Capitol Cost Avoidance

Value StatementProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPH

Technician Involvement

USP Compliant

Order from Doctor

MeasurementsCost Avoidance Rent Reduction

Reduced Inventory $

Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND

DEFECT FREE1 BY 1

LOWEST COST

Go to the Gemba

Walk the Gembutsu

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Maps

Area Home IV InfusionIdeal State

BUSINESS CASEIncrease production efficiency Decrease delays for patient Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

KEY REQUIREMENTSRPH Technician Involvement USP CompliantOrder from Doctor

MEASUREMENTCost Avoidance Rent Reduction

Reduced Inventory $ Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND DEFECT FREE 1 BY 1 LOWEST COST

Focus = Just the Value Added

Learning = Begin to ldquoSee Wasterdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion Future StateBUSINESS CASE

Increase production efficiency

Decrease delays for patient

Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPHTechnician InvolvementUSP CompliantOrder from Doctor

MEASUREMENTSCost Avoidance Rent Reduction

Reduced Inventory $Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMANDDEFECT FREE1 BY 1LOWEST COST

The 6-18 month improvement plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Two

Think 5X

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

OLD PROCESS

Typical Process = 23 VA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 9: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson One

Value Stream Analysis Provides the Improvement

Plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion

Current State

Business CaseIncrease production efficiency

Decrease delays for patient

Capitol Cost Avoidance

Value StatementProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPH

Technician Involvement

USP Compliant

Order from Doctor

MeasurementsCost Avoidance Rent Reduction

Reduced Inventory $

Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND

DEFECT FREE1 BY 1

LOWEST COST

Go to the Gemba

Walk the Gembutsu

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Maps

Area Home IV InfusionIdeal State

BUSINESS CASEIncrease production efficiency Decrease delays for patient Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

KEY REQUIREMENTSRPH Technician Involvement USP CompliantOrder from Doctor

MEASUREMENTCost Avoidance Rent Reduction

Reduced Inventory $ Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND DEFECT FREE 1 BY 1 LOWEST COST

Focus = Just the Value Added

Learning = Begin to ldquoSee Wasterdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion Future StateBUSINESS CASE

Increase production efficiency

Decrease delays for patient

Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPHTechnician InvolvementUSP CompliantOrder from Doctor

MEASUREMENTSCost Avoidance Rent Reduction

Reduced Inventory $Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMANDDEFECT FREE1 BY 1LOWEST COST

The 6-18 month improvement plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Two

Think 5X

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

OLD PROCESS

Typical Process = 23 VA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 10: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion

Current State

Business CaseIncrease production efficiency

Decrease delays for patient

Capitol Cost Avoidance

Value StatementProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPH

Technician Involvement

USP Compliant

Order from Doctor

MeasurementsCost Avoidance Rent Reduction

Reduced Inventory $

Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND

DEFECT FREE1 BY 1

LOWEST COST

Go to the Gemba

Walk the Gembutsu

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Maps

Area Home IV InfusionIdeal State

BUSINESS CASEIncrease production efficiency Decrease delays for patient Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

KEY REQUIREMENTSRPH Technician Involvement USP CompliantOrder from Doctor

MEASUREMENTCost Avoidance Rent Reduction

Reduced Inventory $ Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND DEFECT FREE 1 BY 1 LOWEST COST

Focus = Just the Value Added

Learning = Begin to ldquoSee Wasterdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion Future StateBUSINESS CASE

Increase production efficiency

Decrease delays for patient

Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPHTechnician InvolvementUSP CompliantOrder from Doctor

MEASUREMENTSCost Avoidance Rent Reduction

Reduced Inventory $Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMANDDEFECT FREE1 BY 1LOWEST COST

The 6-18 month improvement plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Two

Think 5X

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

OLD PROCESS

Typical Process = 23 VA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 11: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion

Current State

Business CaseIncrease production efficiency

Decrease delays for patient

Capitol Cost Avoidance

Value StatementProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPH

Technician Involvement

USP Compliant

Order from Doctor

MeasurementsCost Avoidance Rent Reduction

Reduced Inventory $

Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND

DEFECT FREE1 BY 1

LOWEST COST

Go to the Gemba

Walk the Gembutsu

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Maps

Area Home IV InfusionIdeal State

BUSINESS CASEIncrease production efficiency Decrease delays for patient Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

KEY REQUIREMENTSRPH Technician Involvement USP CompliantOrder from Doctor

MEASUREMENTCost Avoidance Rent Reduction

Reduced Inventory $ Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND DEFECT FREE 1 BY 1 LOWEST COST

Focus = Just the Value Added

Learning = Begin to ldquoSee Wasterdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion Future StateBUSINESS CASE

Increase production efficiency

Decrease delays for patient

Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPHTechnician InvolvementUSP CompliantOrder from Doctor

MEASUREMENTSCost Avoidance Rent Reduction

Reduced Inventory $Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMANDDEFECT FREE1 BY 1LOWEST COST

The 6-18 month improvement plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Two

Think 5X

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

OLD PROCESS

Typical Process = 23 VA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 12: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion

Current State

Business CaseIncrease production efficiency

Decrease delays for patient

Capitol Cost Avoidance

Value StatementProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPH

Technician Involvement

USP Compliant

Order from Doctor

MeasurementsCost Avoidance Rent Reduction

Reduced Inventory $

Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND

DEFECT FREE1 BY 1

LOWEST COST

Go to the Gemba

Walk the Gembutsu

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Maps

Area Home IV InfusionIdeal State

BUSINESS CASEIncrease production efficiency Decrease delays for patient Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

KEY REQUIREMENTSRPH Technician Involvement USP CompliantOrder from Doctor

MEASUREMENTCost Avoidance Rent Reduction

Reduced Inventory $ Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND DEFECT FREE 1 BY 1 LOWEST COST

Focus = Just the Value Added

Learning = Begin to ldquoSee Wasterdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion Future StateBUSINESS CASE

Increase production efficiency

Decrease delays for patient

Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPHTechnician InvolvementUSP CompliantOrder from Doctor

MEASUREMENTSCost Avoidance Rent Reduction

Reduced Inventory $Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMANDDEFECT FREE1 BY 1LOWEST COST

The 6-18 month improvement plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Two

Think 5X

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

OLD PROCESS

Typical Process = 23 VA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 13: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Maps

Area Home IV InfusionIdeal State

BUSINESS CASEIncrease production efficiency Decrease delays for patient Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

KEY REQUIREMENTSRPH Technician Involvement USP CompliantOrder from Doctor

MEASUREMENTCost Avoidance Rent Reduction

Reduced Inventory $ Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMAND DEFECT FREE 1 BY 1 LOWEST COST

Focus = Just the Value Added

Learning = Begin to ldquoSee Wasterdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion Future StateBUSINESS CASE

Increase production efficiency

Decrease delays for patient

Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPHTechnician InvolvementUSP CompliantOrder from Doctor

MEASUREMENTSCost Avoidance Rent Reduction

Reduced Inventory $Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMANDDEFECT FREE1 BY 1LOWEST COST

The 6-18 month improvement plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Two

Think 5X

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

OLD PROCESS

Typical Process = 23 VA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 14: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Value Stream Map

Area Home IV Infusion Future StateBUSINESS CASE

Increase production efficiency

Decrease delays for patient

Capital Cost Avoidance

VALUE STATEMENTProvide safe effective and accurate meds and information to the patient at lowest cost

Key RequirementsRPHTechnician InvolvementUSP CompliantOrder from Doctor

MEASUREMENTSCost Avoidance Rent Reduction

Reduced Inventory $Reduced Patient Flowtime

Increased Quality for Patient

IDEAL STATEON DEMANDDEFECT FREE1 BY 1LOWEST COST

The 6-18 month improvement plan

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Two

Think 5X

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

OLD PROCESS

Typical Process = 23 VA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 15: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Two

Think 5X

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

OLD PROCESS

Typical Process = 23 VA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 16: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

OLD PROCESS

Typical Process = 23 VA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 17: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

NEW PROCESS

Typical First ldquoPassrdquo = Drop frac12 - StepsHandoffsErrorsTimeWaste

Typical 4th5th ldquoPassrdquo = Drop 90- StepsHandoffsErrorsTimeWaste

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 18: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Three

It is AlwaysMore Than

You Think

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 19: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

World Class Benchmarking

ldquoBatchrdquoSystem

ldquoToyotardquoSystem (Lean)

Inventory Turnover 3x 30x Cash Generation

Customer Complaint Rate 10000ppm 100ppm Turns

Company Into

CustomerLead Time

- 95A Growth Company

Space -90

Productivity 1x 4x Margin Improvementldquo2rdquo ptsyr for 6 yrs

MOST DONrsquoT REALIZE HOW HIGH ldquoHIGHrdquo REALLY IS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 20: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Four

MeasurementCan beSimple

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 21: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring Lean

Toyota Production System Vision of the Ideal ndash True North

Customer Satisfaction = Quality - 0 Defects Delivery ndash Lead Time = Value Added Time Cost ndash 100 Value Added Work

Improvement in Q D amp C drives ALL financial performance measures

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 22: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Measuring LeanLean is a PEOPLE DRIVEN PROCESS

Thus lean leaders including Toyota add ldquoHuman Developmentrdquo to the TOP of their targeted measurements list

The priority ranking for improvement is HDQD amp CP But lean enterprises expect world class annual improvement

rates (ldquoDouble Digitsrdquo) in all four categories

ldquoThere can be no successful Monozukuri (making things) without Hito-Zukuri (making people)rdquo

Toyota

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 23: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Five

Quality Pays

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 24: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

38

29

2027

2013

2114

705

10152025303540

High 60 25 Low

Inferior33-67

Superior

ROI

Relative Market Share

Relative Quality

(percentile)

Higher Relative Quality = Higher ROI ndash At Any Market Share LevelPIMS Principles R Buzzell amp B Gale

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 25: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

US Customer Behavior Study

Customers who have been disappointed by defects malfuntions and other basic quality problems 90 go away without saying anything and DO NOT RETURN

85 of those people tell AT LEAST 9 other people of their dissatisfaction 15 voice their dissatisfaction to AT LEAST 20 other people

Every REPORTED quality problem should be treated as a ldquogolden nuggetrdquo ndash the beginning of the next

improvementSource TARP ndash Technical Assistance Research Program

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 26: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Six

Short Consistent

Lead Times

Provide Growth

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 27: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

02

04

06

08

1

12

14

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A1988 1989 1990

ldquoMonthly Shipmentrdquo Months Past Due

ldquoDaily Shipmentsrdquo

Delivery Performance

Moved from delivery once a month to daily in 2 frac12 yrsMoved from 0 on time to 100 on time

95 Reduction in Throughput TimeLead Time

5 ldquopasses through the Value Streamrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 28: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate

Company Business Lead TimeDifference

Growth Average

Atlas Door Industrial Doors

66 5x

Ralph Wilson Plastics

Decorative Laminates

75 4x

Thomasville Furniture 70 2x

Lean can reduce lead time of all customer sensitive processes ndash EG Product Development Application Engineering Order Entry Corrective Action

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 29: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seven

The Fastest Way to Increase Capacity is hellip

Lean Transformation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 30: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion Impact

0

53

64

76

0

01

02

03

04

05

06

07

08

1987 1988 1989 1990

Jacobs Space Recovered

of total square footage

frac12 of floor space freed up in 1 yrfrac34 of floor space freed up in 3 yrs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 31: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eight

Productivity

Drives 90 of

Internal Costs

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 32: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nine

A Four Fold

Productivity Gain

IS

Possible

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 33: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Conversion ImpactJacobs Productivity Trend

Kits Packed100 hours

1989 Plan 1989 Actual

+86productivity

GK to Pres Tool Group

Few firms measure productivity ndash

Even fewer push double digit improvement rates

ldquoWe set really high targets and then try like crazy to get there If we donrsquot reach a target we try to figure out why we fell short What stopped us Is there anything we can do to take another steprdquo

David Absher TMMNA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 34: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

JACOBS PRODUCTIVITY TRENDKits Packed100 Hours Worked

+271Productivity(after 5 yearsof conversion

Work)

Lean Conversion Impact

Note Implementation stopped 990 Restarted 192

Lean Event Activity Drives Results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 35: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Ten

As a Leader

It will take 70 of your timefocus to get double digit gains in productivity

But 30 of your timefocus will get double digit gains in people development quality and delivery cycle times

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 36: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twelve

PEOPLE ARE THE FOUNDATION OF

ALL IMPROVEMENT

ldquoWE BUILD PEOPLE

BEFORE WE BUILD CARSrdquoTOYOTA

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 37: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota Style HabitsBehaviors

bull Be a mentor and a role modelndash People development is 1 True North goal

ldquowe build people before we build carsrdquobull The key to people development is mentoring

ndash Thus mentoring is the 1 skill of Toyota leadersraquo You demonstrate mentoring skill through the

development amp performance of those who work for you problem solving

raquo You CANNOT be promoted until you have demonstrated your desire and ability to mentor

ldquoGood leaders do not produce more followers Good leaders produce more good leadersrdquo Takashi Harada Toyota OMCD

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 38: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Jake Brake-1987 to 1998

ndash Sales 380 of 1987ndash Productivity 470 of 1987

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 39: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

39

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 40: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Sixteen

Lean Improves

Both the

Income Statement

And the

Balance Sheet

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 41: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean has positive impacts on both the Income Statement and Balance Sheet

bull Income Statementndash Total Sales

bull Grows at 2-4X industry growth rate due to short DELIVERY TIMEbull Grows due to improved QUALITYbull Grows due to faster lower cost NEW PRODUCT DEVELOPMENT

ndash Cost of Salesbull Is reduced due to productivity growth

ndash Selling General amp Administrative Costsbull Is reduced due to productivity growth

ndash Financing Costsbull Reduced as inventory goes downbull Debt paid down with increased income

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 42: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

bull Balance Sheetndash Inventory

bull Reduced dollar value of inventoryndash Sales growth requires less working capital

ndash Fixed Assetsbull Frees up both floor space and machine capacity

ndash Sales growth requires less fixed capital

bull Net net = A Synergistic Impact on ROA amp ROE

PDQDC DRIVE ALL FINANCIAL METRICS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 43: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Manufactured Fireplace Firm ndash 7 years of lean

bull Recordable accident rate -81bull Warranty costs -69bull Lead time 6 weeks 5 days

ndash Mixed truck load build to dealer orderbull Complete and on time 84 98bull Enterprise productivity +38bull Inventory turnover +171bull Salessquare foot +131bull Operating income percent +221bull Return on assets +237bull Cash flow +519

HDQD amp C Drive all Financial Metrics

bullTrue North improvements are all ldquodouble digitrdquo gainsbullFinancial improvements show TN synergy with ldquotriple digitrdquo gains

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 44: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 45: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Seventeen

Lean

ldquoFeels Wrongrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 46: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

ldquoIt Just Doesnrsquot Feel Rightrdquo

bull The principles of lean can easily be absorbed in a one-half day classroom session BUT

bull The intellectually easy to grasp principles such as ldquoone-piece flowrdquo GO AGAINST THE TRAINING AND PRACTICES OF OUR WHOLE PRIOR CAREERS

ldquounderstanding theory in the head is NOT the problem The problem is to remember it in the body to make it instinctive

Taiichi Ohno ldquoThe Evolution of the Toyota Production Systemrdquo

Unpublished manuscript

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 47: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

It Just Doesnrsquot Feel Right

The Core Concepts of Lean are not Complex Ideas but they are Difficult to apply because they are the OPPOSITE of what we currently believe

From we need to ldquofire fightrdquo todayrsquos problems quickly Tohellipwe need to ask ldquowhyrdquo five times

From seeing people as the source of problems Tohellipseeing processes as the source of problems

From ldquoA supervisorrsquos ldquonatural urgerdquo to redeploy the lowest performer from a work team whose area has been Kaizenedrdquo Tohelliprdquoalways redeploying the best team membersrdquo

From ldquoYou go to class to learnrdquo TohellipManagement teaches by example ndash guiding associates through developmental experiences

ndash learn by doing

From ldquoWhat matters is how good we arerdquo TohelliprdquoWhat matters is how fast we are improvingrdquo

Itrsquos not hard to understandhellipItrsquos hard to do

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 48: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Eighteen

Lean knowledge

is acquired through

long term

HANDS ON LEARNING

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 49: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

The Learning Curvebull You can only really learn lean production by OJT (the ldquodirty handsrdquo method)bull If you spend a full week on a Kaizen event improving a small area of your

operation it will take a dozen weeks of the OJT to give ldquoBASIC TRAININGrdquo in lean production (at a Kaizen eventmonth pace this takes one year)- GRADE SCHOOL

bull If you continue to gain personal experience in full-time week-long ldquodosesrdquo it will take about 36 weeks of OJT before you are COMPETENT with most of the lean ldquotoolsrdquo- HIGH SCHOOL

bull However it will take about 60 weeks or more of OJT (about 5 years) for you to be fully competent with the ldquotoolsrdquo and also fully BELIEVE in the principles-COLLEGE

bull ldquoInstitutionalizingrdquo the behaviors that are the foundation for a new continuous improvement culture takes more like 100 events + a decade of lean transformation leadership experience - GRADUATE SCHOOL

EVERYONE underestimates the length of the learning curve

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 50: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Toyota has long maintained that the Toyota Way can only be grasped through constant

practice in the workplace under the tutelage of a deeply

experienced MasterFortune February 7 2005

ldquoSome lessons canrsquot be taught They must be lived to be learnedrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 51: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Nineteen

Lean Participation

Creates New

Attitudes and Behaviors

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 52: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 53: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Chart1

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 54: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Table 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 6 7 8 9 10 p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=44) (N=21) (N=13) (N=8) (N=2) (N=46) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 326 330 308 386 300 343 0045
People are encouraged to balance their work and personal life 286 282 282 290 302 307 284 324 300 375 300 313 ns
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 323 367 323 388 400 364 0002
Management has kept promises made to us 278 274 274 277 295 300 286 329 285 363 300 320 0028
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 325 348 338 375 350 357 lt001
I am satisfied with my job security 294 291 288 297 310 325 298 319 323 363 350 343 lt001
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 307 343 315 363 350 339 lt001
At work my opinions seem to count 277 268 272 284 304 311 300 330 315 388 350 347 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 326 343 308 375 350 352 0006
Overall I think this is a great place to work 312 309 309 313 321 341 314 357 323 363 350 351 0004
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
Page 55: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Graph 5Day 0-10

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 56: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Graph 5Day 0-10

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
32558139535
28409090909
32272727273
28636363636
325
29772727273
30681818182
3
32558139535
31363636364
33
32380952381
36666666667
32857142857
34761904762
31904761905
34285714286
33
34285714286
35714285714
30769230769
3
32307692308
28461538462
33846153846
32307692308
31538461538
31538461538
30769230769
32307692308
38571428571
375
3875
3625
375
3625
3625
3875
375
3625
3
3
4
3
35
35
35
35
35
35
34347826087
31304347826
36444444444
31956521739
35652173913
34347826087
33913043478
34666666667
35227272727
35111111111

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5
6 6 6 6 6 6 6 6 6 6
7 7 7 7 7 7 7 7 7 7
8 8 8 8 8 8 8 8 8 8
9 9 9 9 9 9 9 9 9 9
10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more 10 or more
Page 57: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Table 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Mean Scores by Event Participation (5-day)
Total 0 1 2 3 4 5 or more p-value
(N=2761) (N=1344) (N=748) (N=337) (N=142) (N=56) (N=134) for trend
My manager shows appreciation for the work I do 294 288 290 302 315 316 334 lt001
People are encouraged to balance their work and personal life 286 282 282 290 302 307 307 0003
I would recommend this organization to a friend as a good place to work 311 307 308 313 327 336 349 0001
Management has kept promises made to us 278 274 274 277 295 300 309 0003
My manager or someone at work seems to care about me as a person 312 307 310 319 315 342 344 0010
I am satisfied with my job security 294 291 288 297 310 325 324 0004
My manager provides me with sufficient opportunities to improve myself 291 286 286 298 300 325 328 0004
At work my opinions seem to count 277 268 272 284 304 311 328 lt001
People here are willing to give extra to get the job done 311 306 311 311 317 332 339 0004
Overall I think this is a great place to work 312 309 309 313 321 341 338 0008
The significance for trend (p-value) indicates the level at which mean satisfaction scores increase with the number of events attended
Page 58: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Graph 5Day 0-5+

ampCEmployee Opinion SurveyMean Satisfaction by Event Participation2006

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Page 59: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Graph 5Day 0-5+

Manager shows appreciation
Encouraged to balance work and personal life
Recommend this org as a good place to work
Management has kept promises
Someone at work seems to care about me
Satisfied with my job security
Manager provides sufficient opportunities
My opinions seem to count
People are willing to give extra
Overall this is a great place to work
Number of Events
Mean Satisfaction
5-Day Event Participation
28763277693
28187969925
30660592255
27418096724
3070411985
29108614232
28626415094
26809631302
30603053435
30890410959
28974358974
28189189189
30824324324
27443820225
30989159892
28820375335
28553888131
27197278912
31132332879
30895522388
30242424242
28952095808
31265060241
27668711656
31933534743
296996997
29757575758
28379204893
31097560976
31280487805
31478873239
30214285714
32661870504
29492753623
31489361702
30985915493
3
30425531915
31739130435
32142857143
31636363636
30714285714
33636363636
3
34181818182
325
325
31090909091
33214285714
34107142857
334
307
349
309
344
324
328
328
339
338

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4
5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more 5 or more
Page 60: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Mean Graph Data

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
5-Day 0 1 2 3 4 5 6 7 8 9 10 or more
Manager shows appreciation 288 290 302 315 316 326 330 308 386 300 343
Encouraged to balance work and personal life 282 282 290 302 307 284 324 300 375 300 313
Recommend this org as a good place to work 307 308 313 327 336 323 367 323 388 400 364
Management has kept promises 274 274 277 295 300 286 329 285 363 300 320
Someone at work seems to care about me 307 310 319 315 342 325 348 338 375 350 357
Satisfied with my job security 291 288 297 310 325 298 319 323 363 350 343
Manager provides sufficient opportunities 286 286 298 300 325 307 343 315 363 350 339
My opinions seem to count 268 272 284 304 311 300 330 315 388 350 347
People are willing to give extra 306 311 311 317 332 326 343 308 375 350 352
Overall this is a great place to work 309 309 313 321 341 314 357 323 363 350 351
VS 0 1 2 3 4 5 6 7 8 10 or more
Manager shows appreciation 288 299 300 316 325 321 343 317 380 344
Encouraged to balance work and personal life 282 283 295 299 311 308 314 333 380 322
Recommend this org as a good place to work 306 311 320 337 346 344 329 333 400 365
Management has kept promises 274 274 283 302 300 305 314 333 380 316
Someone at work seems to care about me 307 314 322 331 343 344 343 350 380 353
Satisfied with my job security 290 294 301 313 327 328 321 317 340 325
Manager provides sufficient opportunities 285 292 303 311 319 326 321 333 340 341
My opinions seem to count 267 283 287 312 321 313 329 333 380 348
People are willing to give extra 306 310 319 332 336 347 329 333 360 342
Overall this is a great place to work 308 310 319 332 331 338 329 333 400 356
5-Day 0 1 2 3 4 5 or more
Manager shows appreciation 288 290 302 315 316 334
Encouraged to balance work and personal life 282 282 290 302 307 307
Recommend this org as a good place to work 307 308 313 327 336 349
Management has kept promises 274 274 277 295 300 309
Someone at work seems to care about me 307 310 319 315 342 344
Satisfied with my job security 291 288 297 310 325 324
Manager provides sufficient opportunities 286 286 298 300 325 328
My opinions seem to count 268 272 284 304 311 328
People are willing to give extra 306 311 311 317 332 339
Overall this is a great place to work 309 309 313 321 341 338
VS 0 1 2 3 4 5 or more
Manager shows appreciation 288 299 300 316 325 334
Encouraged to balance work and personal life 282 283 295 299 311 319
Recommend this org as a good place to work 306 311 320 337 346 351
Management has kept promises 274 274 283 302 300 316
Someone at work seems to care about me 307 314 322 331 343 349
Satisfied with my job security 290 294 301 313 327 326
Manager provides sufficient opportunities 285 292 303 311 319 331
My opinions seem to count 267 283 287 312 321 332
People are willing to give extra 306 310 319 332 336 343
Overall this is a great place to work 308 310 319 332 331 346
Page 61: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty

Every Time You

Restudy a Process

Lean Shows New

Levels of

Waste and Improvement

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 62: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquoRepeat Kaizens on the Same Part Number

FNGP Ligonier Indiana Factory 1992-94FEB1992

APRIL1992

MAY1992

NOV1992

JAN1993

JAN1994

AUG1995

Number of associates

21 18 15 12 6 3 3

Pieces made per associate

55 86 112 140 225 450 600

Spaces utilized (sq ft)

2300 2000 1850 1662 1360 1200 1200

Baseline performance before start of lean initiative on this three-shift operation with seven associates per shift

During this period OSHA reportable accidents and Workerrsquos Compensation costs both declined by more than 92 Total capital spending over this period was less than $1000 for a right-sized in-line painting system permitting single-piece flow Source Shingo Prize Examination

At least 6 complete reviews of each process are necessary to achieve full lean results

Given good preparation and follow up more Kaizen events = more results

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 63: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights ReservedSimpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean Success

Organization Changes that Support the Lean Conversion

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 64: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Twenty Six

There is a Level of Full Time Support and Team Activity

Needed to Sustain

ldquoDouble Digitrdquo

Annual Gains in HDQD amp C

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 65: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for Lean

Innovationplanning

Innovation Planning

Running the Business

Daily Management(Run the Business Processes)

Top Management

Middle Management

Supervisors

Workers

Top Management

Middle Management

Supervisors

Workers

Western Perception of Job Functions

Lean Enterprise Perception of Job Functions Source IMAI amp Koenigsaecker

GOAL= STEADILY INCREASE THE PORTION OF THE ORGANIZATION THAT WORKS FULL TIME ON IMPROVEMENT

0 100 of Time Spent

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 66: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Organizing for LeanAlignment-Short TermLean Development Team

Our organizations are built around ldquofire fightingrdquo ndash to start ldquoimprovingrdquo you MUST commit some resources FULL TIME to improvementSuccessful lean conversions have 3 of their employees dedicated FULL TIME to improvement efforts by their 3rd year

The 3 should roughly be1 - future sensei ndash 56 years of FT team1 - future GMsVSMs ndash 23 years on FT team1 - supervisors middle managers ndash about 1 year on FT team

Start with AT LEAST 1 FULL TIME improvement process person per value stream A good formula is to allow the addition of 1 full time Lean team addition for every 5 employees ldquofreed uprdquo through Kaizen eventslean deployment

The Lean Development Team leader should be the site

ldquoheir apparentrdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 67: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lesson Thirty One

You Can Not

Delegate

Leadership

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 68: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

LEADERSHIP

Top Management RoleSuccessful lean conversions are ALWAYS led from the top

Key tasks for executive leadership

Select a ldquosenseirdquo to guide you

Pick an important Value Stream for your initial focus

Set HDQD amp CP goals

Conduct Value Stream Analysis

Dedicate 3 of Value Stream personnel to full time lean team

Initiate improvement events at N10 pace results + learning + culture building

Participate full time in one 3 day value stream analysis plushellip

YOU CANrsquoT DELEGATE LEADERSHIP

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 69: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Spend 1 FULL WEEK early on as a member of a ldquostandard workrdquo team in one of the operations plushellip

Spend 1 FULL WEEK on an administrative process improvement team

Establish a plan to get all senior leadership a dozen full time event experiences

1 a month for first 3 months

1 a quarter there after

Make full time participation a condition of participation in any bonus program

Arrange for a member of the executive leadership team to be on hand for each ldquoFriday Morning Report-outrdquo session during their Kaizen event weeks

This simultaneously shows corporate support AND educates the executive staff on the lean conversion process

Hold a monthly review of improvement projects amp results for all locations that have begun the lean conversion process (Strategy Deployment)

The ldquoanti-bodiesrdquo must be addressedhellipand this needs to be done in the first 3 months

Mgmt role contrsquod

ldquoAt Toyota leading is not treated as a discipline distinct from doing rather the authority of leaders derives fom their proficiency as practitionersrdquo

Source Inculcating Culture the Toyota Way The Economist

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 70: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work

To benefit from the Toyota Business System companies must satisfy three basic conditions

1 Top management MUST MAKE A STRONG AND VISIBLE COMMITMENT to the system MUST PARTICIPATE DIRECTLY in implementing the system and MUST INSTRUCT MIDDLE LEVEL MANAGERS TO DO LIKEWISE

2 All employees must participate in the system

3 The companies must put in place a solid framework for cultivating capable leaders and for providing employees with necessary practical skills Source The Toyota Production System TMC

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 71: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to work (contrsquod)Once top executives recognize that corporate survival depends on fundamental change THEY MUST LEAD THAT CHANGE THEMSELVES

They must venture into the workplace

They must let employees know what kind of change they envision and why

They must put middle management on notice that managersrsquo jobs will hinge on active cooperation in promoting change

You canrsquot manage a lean conversion ndash

YOU HAVE TO LEAD IT

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 72: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Putting the System to Work (contrsquod)

Next executives must translate their commitment into an organizational framework They should begin by establishing a task force under a capable leader to set up a showcase production line

That line becomes a staging area for disseminating the new production concepts throughout the company

Members of the original task force supervise work in implementing the concepts on other production lines

Source The Toyota Production System Toyota Motor Corporation

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 73: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

BENCHMARK LEAN LEADERSHIP DEVELOPMENT

65

bullDANAHER IMMERSIONbull13 weeks of full time Leanbull9 Events + 3 Strategy DeploymentEVSAbullPersonal Mentor + Assessor

bullHNI EXECUTIVE DEVELOPMENTbull4 Event Weeks in first 6 monthsbullProduction Standard Work Value Stream Analysis Administrative Standard Work 3Pbull+ 3 Additional Event Experiences every year-as a condition for bonus plan participation

SENIOR EXECUTIVES MUST LEARN TO ldquoSEE WASTErdquo

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 74: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Achievement of the full results of a lean enterprise conversion will take 6 to 10 yearsndash The magnitude of improvement will typically

revolutionize a companyrsquos position in itrsquos industry

bull however the typical pattern for the first couple of years is not one of consistent progress

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 75: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull First yearndash Progress is often appears slowndash Two steps forward one step backwardndash Individual projects seem to show

great potentialndash Sometimes difficult to see significant enterprise wide improvement

bull Typically only 20-30 of business is engaged in Lean activityndash Many people are still ldquoconfusedrdquo by new approach or ldquoupsetrdquo by

change

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 76: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Second yearndash The major ldquoresistancerdquo year for the conversion

processbull ldquofifth columnrdquo of anti-change employees are

highlighting all the instances of ldquoone step backwardrdquobull ldquochange agentsrdquo will be inexperienced and make

many implementation ldquoerrorsrdquo (all part of the learning process but difficult to explain)

ndash Typically only 40-50 of the business is engaged in Lean activity

ndash By the end of the second year ldquothe jury may still be outrdquo on the conversion process

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 77: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Third yearndash Managers gain skill in managing the process

bull More team members have prior experience applying the lean toolsbull more ldquotwo steps forwardrdquo -- ldquofewer falling backrdquo results

ndash Typically only 60-70 of the business is engaged in Lean activityndash Compounding of improvements - in morale quality delivery and

productivity -- are large enough to demonstrate successndash By the end of the third year the general comment is ldquowe are making

great progressrdquobull But when will we be done

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 78: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Laying the New Foundation

bull Fourth yearndash Change is gradually becoming the new ldquonormrdquondash The change process begins to be ldquoinstitutionalizedrdquondash Tremendous positive momentum is building in the organizationndash Typically only 80-90 of the business is engaged in Lean activityndash We have begun to create a NEW CULTURE ndash a ldquolearning organizationrdquo Based

on Lean tools philosophies and behaviorsbull Almost everyone has been on at least one Jishukin

Instead of wondering ldquowhen will we be ldquoleanrdquordquo and stop people begin to believe that the process and its benefits really are CONTINUOUS

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 79: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

Lean Transformation is

ldquoLeadership IntensiverdquoGK

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72
Page 80: SBS Presentation Leading the Lean Enterprise Transformation · Thus lean leaders, including Toyota, add “Human Development” to the TOP of their targeted measurements list The

Simpler Business Systemreg 110 copy1996-2010 Simpler Consulting LP All Rights Reserved

  • SBS PresentationLeading the Lean Enterprise Transformation
  • Slide Number 2
  • What is Lean
  • Slide Number 4
  • Slide Number 5
  • Slide Number 6
  • What is Lean
  • Slide Number 8
  • Slide Number 9
  • Slide Number 10
  • Slide Number 11
  • Slide Number 12
  • Slide Number 13
  • Slide Number 14
  • Lesson Two
  • Slide Number 16
  • Slide Number 17
  • Lesson Three
  • World Class Benchmarking
  • Lesson Four
  • Measuring Lean
  • Measuring Lean
  • Slide Number 23
  • Slide Number 24
  • US Customer Behavior Study
  • Slide Number 26
  • Lean Conversion Impact
  • Reducing Lead Times by frac34=Growing 2-4 Times Industry Rate
  • Slide Number 29
  • Lean Conversion Impact
  • Slide Number 31
  • Slide Number 32
  • Lean Conversion Impact
  • JACOBS PRODUCTIVITY TREND
  • Slide Number 35
  • Slide Number 36
  • Toyota Style HabitsBehaviors
  • Jake Brake-1987 to 1998
  • Slide Number 39
  • Slide Number 40
  • Lean has positive impacts on both the Income Statement and Balance Sheet
  • Slide Number 42
  • Manufactured Fireplace Firm ndash 7 years of lean
  • Slide Number 45
  • ldquoIt Just Doesnrsquot Feel Rightrdquo
  • It Just Doesnrsquot Feel Right
  • Slide Number 48
  • The Learning Curve
  • Slide Number 50
  • Slide Number 51
  • Slide Number 52
  • Slide Number 53
  • REVERSAL OF ldquoLAW OF DIMINISHING RETURNSrdquo
  • Organizing for Lean Success
  • Slide Number 56
  • Organizing for Lean
  • Organizing for Lean
  • Slide Number 59
  • LEADERSHIP
  • Slide Number 61
  • Slide Number 62
  • Slide Number 63
  • Slide Number 64
  • BENCHMARK LEAN LEADERSHIP DEVELOPMENT
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Laying the New Foundation
  • Slide Number 71
  • Slide Number 72