hoshin ism 100615v7

S

Hoshin Kanri

Harnessing the Collective Thinking of All Employees: to Deploy Policies that Operationalize Strategic Goals and

to Operationalize the New Role of Procurement

ISM – Dallas, TXOctober 8, 2015

Dennis M. GawlikFaculty – Sustainable Operations

The Pinchot University –Bainbridge Graduate Institute

Toyota’s 50 Year Vision

We will lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people.

Through our commitment to quality, constant innovation and respect for the planet, we aim to exceed expectations and be rewarded with a smile.

We will meet our challenging goals by engaging the talent and passion of people who believe there is always a better way.

Current Strategic Planning Process’ Ailing Symptoms

Does the business you work with experience any of these common business problems?

Many competing initiatives / goals / priorities that do not ever seem to get implemented?

Spending a great deal of time in unproductive meetings?

Slow to respond to changing customer needs / concerns?

Disengaged employees?

If yes, it may be due to the planning process your business uses.

Traditional Planning Process

Traditional Planning Process: Strategic planning is an organization’s process of

defining its long-term strategy, or direction, and making decisions on allocating its resources to pursue this strategy.

It involves setting goals, determining actions to achieve the goals, and mobilizing resources to execute the actions.

A strategy of Management by Objective (MBO) describes what ends/goals needs to be achieved.

Drawbacks of Traditional Planning Processes

• Ends (results) vs. Means (how)

• Reactive vs. Proactive

• Top-Down Driven

Hoshin KanriThe Toyota Way

Hoshin Kanri: In Japanese, (方針管理 ), Hoshin means "compass needle" or

"direction". Kanri means “control” or “management”. A method devised to capture and cement a strategic

goal(s) as well as flashes of insight about the future, and develop the means to bring these into reality.

This method aligns an organization toward accomplishing a single goal or a strategic plan in a way that creates organizational flexibility to adapt to marketplace conditions and changes for long-term success.

The Lean Leadership Development Model

3 Support Daily KaizenMake improvement a daily routine

2 Coach and Develop Others

1 Commit to Self DevelopmentLearn a systematic improvement pattern through repetition

TRUE NORTHVALUES

ChallengeKaizen MindGo and SeeTeamworkRespect

PD

CA

PD

CA

PD

CA

4 Create Vision and Align Goals

Align improvement goals vertically & horizontally

PD

CA

Coach others on theImprovement pattern

Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015, Figure 7-1. The Lean Leadership Development Model (we are focusing on step 4)

Hoshin Kanri is a Top-Down and Bottom-Up Learning Process

CompanyGoal

Brea

kdow

n of H

oshin

“Catc

hball

” acti

vity

Respect for people shown by contribution to company

business

Contributing to upper Hoshin

Company Hoshin

Division Hoshin

Department Hoshin

Individual Priority

Horizontal Alignment

On Job Development

Problem SolvingVertical Alignm

ent

Deploy the plan (Catchball)

Implement

the plan

Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015, Horizontal and Vertical Alignment

CEO, Group President, EVP Monthly

Who Frequency

Group VP,Operations

DirectorWeekly

Who Frequency

Plant Manager Daily

Who Frequency

Area Manager Every Shift

Who Frequency

Team Leader Hourly

Who FrequencyProduction Line

Production Area

Regional Operations

Plant Level

ExecMgmt.

Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015, Figure 7-11. Standard Meetings by Responsibility and Frequency

Frequency of Planning

What you see:Visual Metrics Aligned from Top to Bottom

to meet Annual Plan

HoshinVision

Floor Management Development System:Trim Group 1

Main KPIs

ProcessKPIs

Sub-KPIs

Safety Quality

Productivity Cost HR

. . . ..

Trim Shop

Assembly Division I

Plant-Wide

Trim 1 Trim 2 Trim 3 Trim 4

Door Trim Chassis Final

Stamp Body Paint Assembly

.. . . .x x xx x

.... ...... X

X X

X

ProblemX

.. ...

Shop KPIs

Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015, Visual Boards that Align top-level Plan to Shop Floor Metrics

S

HoshinVision

Floor Management Development System:Trim Group 1

Main KPIs

ProcessKPIs

Sub-KPIs

Safety Quality Productivity Cost HR. . . . .

. . . . .x

xx

xx

. . . . .. . . . . X

X X

X

ProblemX

. . . . .

Shop KPIs

Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015, Floor Management Development System Board

Attributes of Hoshin Kanri• Align shared

improvement goals both vertically and horizontally within the organization

• ‘Means’ Focused• Customer / Business

Centric• Builds Employee

Ownership• Execution at All Levels• Proactive / Flexible• Periodic Follow-Up &

Review• Reflection / Learning

Organization• Inclusive in Approach

Comparison between Management By Objective (MBO) and Hoshin

Kanri

Management by Objectives Hoshin KanriShort-Term, No Philosophy Long-Term, Strong Guiding Principles

Results Oriented Evaluation of Effort

Concerned with Results and Process with Focus on People Development

Top down Communication

Top down Direction Setting and Bottom-up flow of Information and means

Directive Participative

Primarily Authority Oriented Primarily Responsibility Oriented

Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015, Figure 7-7: Comparison between Management by Objectives and Hoshin Kanri

Survey Background:

• Examined Strategic Planning & Hoshin Kanri Planning Processes

• Mid-Size & Large Organizations

• Middle & Upper-Management

• 273 Surveys Sent Out

• 64 Surveys Received Back

How often is Strategic Planning Conducted?

Annually I do not Know

Monthly Quarterly

Semi-Annually

71%

14%8%

4%

3%

Sample Size: 273 Surveys 64 Returned

Satisfied With Process?

68% - Indicated that Their Strategy was Not Successful or Neutral

32% Indicated that Their Strategy was Extremely or Quite Successful

Extremely DissatisfiedQuite DissatisfiedSomewhat DissatisfiedNeitherExtremely SatisfiedSomewhat SatisfiedQuite Satisfied


68% Not Satisfied with

Process

32% Satisfied

with Process

Components of a Successful Strategy

Strong Upper Management Support Needed

Leadership Buy-In

Meets Priorities

Helps Achieve Strategic Objectives

2 Way Communication6%

Compelling Reason5%

Continual Improvement6%

Empower Others5%

Improvement Projects5%

Leadership Buy-in13%

One Strategy5%

Right Culture7%

Support Upper Mgmt.

34%


Management’s Role inHoshin Kanri: Set Clear Objectives

33% Develop & Coach 24% Goal Flow-down 14% Break-through Strategies

10% Solve Major Problems 10%

Why Use Hoshin Kanri? Difficult to track Progress to Plan 27% Organizational Goals Confusing 26% No Plan Continuity 18% Misinterpretation of Direction 12% Projects not Related to Goals 10%

Sample Size: 273 Surveys, 64 Returned

Pre-Existing Conditions Prior to Adopting Hoshin

Kanri


Did not change with market

Had Process, were not effective

More than 5 Strategic Objectives

No Process if missed targets

No Steady Progress

(blank)

0 2 4 6 8 10 12 14 16 18

What Words Describe Hoshin Kanri?

Accou

ntabil

ity

Align

ment

Breakt

hroug

h

Catch

ball

Clarity

Commitm

ent

Coord

inatio

n

Engage

ment

Execut

ion

Flowdow

nFoc

us

Follow

-throu

gh

Intera

ctive

Proces

s

Resul

ts

Strate

gyStr

etch

Struct

ure

Sustai

nmen

t

Transf

ormati

on0

5

10

15

20

25

30

Engagement


AlignmentExecution

Follow Through

Strategy

Critical Success Factorsof Using Hoshin Kanri


Accou

ntabili

ty - Im

plemen

tating

Accou

ntability

- Reso

urcing

Breakt

hrough

Objecti

ves Other

Proces

s Focu

s

Resul

ts Foc

used

Strate

gic Metr

ics

Unders

tandin

g of V

ariab

les

(blan

k)0

2

4

6

8

10

12

14Key Factors

Results as Lean Evolves Depends on

PhilosophyTo

tal B

usin

ess

Resu

lts

from

Lea

n Tr

ansf

orm

atio

n

Starting out MaturingMaturity in Integrating Lean and Business Strategy

I.Apply ToolsThrough PDCA

II. Management Led Lean III. Aligned Continuous Improvement

Without Philosophy

With Philosophy

Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015, Figure 7-15. Results as Lean Evolves Depend on Philosophy

``

HoshinKanri

Daily Mgmt. (DM) with Kaizen

DM with no HK

Time

Perfo

rman

ce (K

PI)

HK with no DM

PD

CA

PD

CA

PD

CA

PD

CA

PD

CA

PD

CA

Relationship between Hoshin Kanri & Daily Management

- Both are essential - Maintain good balance

Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015, Figure 7-5. Hoshin Kanri and Daily Management work together for breakthroughs and sustainment

- Both are essential - Maintain good balance

Expected Return from Process Improvement Using Hoshin Kanri


Imme-diate1 Month1 Quarter6 Months1 Year

Another Study: The Role of Procurement Has

Changed

Xchanging 2015; Global Procurement Study

Most Important KPIs:Management Still Focuses on Cost


Cost Factors

Procurement's Perception of Meeting

Targets


Procurement Operations Challenges


Top Procurement Operation’s Challenges



Using Hoshin Kanri can Assist Procurement Professionals

Why Procurement Should Use Hoshin Kanri?

Help Meet KPIs

Assist in Meeting Targets

Address Time Pressures

Increase Stakeholder Engagement

Address Talent Shortages

Engage employees

Conclusion• Over 70% of

Organizations conduct Annual Strategic Plans

• 68% Not Satisfied with the Process

• Hoshin Kanri Ties Strategy Development with Daily Management

• Hoshin Kanri Aids in Engagement, Alignment, Execution & Follow Through

• Expect to See Return Between 3 and 12 Months

What Questions Do You Have?

Stabilize & Standardize Flow (11 Steps):

1. Define Future State Value Stream2- 6. Implement Flow & Standard

Work7. Deploy Material Presentation

details8. Implement 5S & Workplace

Organization 9. Improve and Standardize Change

Over10.Establish and Develop Team

Leader11. Implement Layered Process Audits

Year 2 -5: Dana Operating System Implementation Roadmap

DOS Training Modules

and Standards

KPI’s, Problem Solving

Implement Flow

Process Improvement (JIT &

Jidoka)

Develop Best

Practices

Establish System

Pull

Stabilize

Cell

Number Completed

Qualified SME's Quality WIP

Floor Space Productivity

C/O time

75 40 62% 64% 36% 76% 68%

Globally 2009 DOS efforts delivered important results• Exceeded Conversion Cost target of $170M Reduction (2010 Target to reduce 5% from 2009 Actual)• Exceeded Reduction targets for Inventory cost & Days on Hand 2008

$915 M63 Days

2009$642 M38

Days

2010 Plan$542 M

($100M)32 Days

INV$DOH

Change($273 M)(25

Days)

2009 DOS Workshop Summary (average KPI Improvement %)

Figure 7-13. Some Results of Implementing the Dana Operating System.

Figure 7-14. Proposal A3 for Planning Dana Operating System Activities and Expected Results

To busy with lo

w resolutio

n to tra

nslate

hoshin ism 100615v7

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