WebinarMarch 31, 2015

Kaizen EventCase Studies

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Welcome to all from across the globe!

© 2015 The Karen Martin Group, Inc.  3

Kaizen

Kai = Change Zen = Good

Continuous Improvement

Tie Kaizen Events to Something Larger 

(A3 Problem Solving or Value Stream Transformation)

Customer%C&A = 99%

Dispatcher

Create W.O. Dispatch Tech

PT = 7 mins.%C&A = 85%

Supplier

Tech

Assess Problem

PT = 75 mins.%C&A = 90%

Billing Admin

Review W.O., payroll, AP & invoice; post immediately

PT = 25 mins.%C&A = 95%

Billing Admin

Compare invoice

register to invoices and mail invoices

PT = 5 mins.%C&A = 99%1x daily

Collections

Receive Cash; Post Payment

2 hrs.

0.117 hrs.

1.25 hrs.

1.25 hrs.

1.25 hrs.

1.25 hrs.

2 hrs.

2 hrs.

24 hrs.

0.417 hrs.

4 hrs.

0.0833 hrs.

480 hrs. Lead Time = 520 hrs.

Process Time = 5.12 hrs.

Tech

Make Repair; Complete call on handheld

PT = 120 mins.%C&A = 75%

Verisae(Customer)

Great Plains

Tech

Pick up Part at Parts Store

PT = 75 mins.%C&A = 95%

`

Excel Spreadsheet (Customer)

Billing Admin

Enter data into Verisae and Excel from Daily

Report

PT = 5 mins.%C&A = 99%1x daily

Tech

Special Order Part

10%

60%

Tech

Contact Tech Support As

Needed

Tech

Get Part from Truck

PT = 0 mins.

30%

EDI Interf ace

120 mins. 75 mins. 75 mins. 2 hrs. 24 hrs. 4 hrs. 60 days

Create Tech Support Center

Create EDI Interface w/ Customers

Centralize Dispatch

Improve Tech Onboarding

Standardize Truck Inventory

Improve Tech Training; Create

Sub-levels

Install kanban

on trucks

Create Customer Billing

Teams

Create stnd work for invoicing

Create invoice exception report

Explore flat rate pricing

Create Tech performance

report

Implement GPS

Define preferred T & C's

Separate labor & payroll

Create EDIInterface w/

Verisae

Establish parameters for time

& parts by service type

Lead Time to Invoice = 34.5 biz hrsLead Time to Cash = 67 biz days

Process Time = 5.1 biz hrs. Activity Ratio = 14.8%

RFPY = 45.4%

Project

Kaizen Event

Service Future State Value Stream Map

© 2015 The Karen Martin Group, Inc.  7

Improvements designed, tested, refined, and implemented during  a Kaizen Event

© 2015 The Karen Martin Group, Inc.  8

Nested PDSA Cycles: Macro to Micro

Strategy Deployment

Value Stream Transformation

Kaizen Events & Projects

© 2015 The Karen Martin Group, Inc.  9

3‐Day Kaizen: Typical Structure

Day 1               (Plan)

Day 2        (Do, Study)

Day 3              (Study, Adjust)

Kick‐offUnderstand the current state Determine root cause(s)Design future stateInterim briefingDesign & test improvementsObtain buy‐inInterim briefingFinalize improvementsTrain process workers & stakeholdersPresent resultsCELEBRATE!

5‐Day Kaizen Event: Typical Structure

Day 1 & 2        (Plan)

Day 3 & 4 (Do, Study)

Day 5              (Study, Adjust)

Kick‐offAnalyze current state Perform root cause analysisDesign future stateInterim briefingDesign & test improvementsObtain feedbackInterim briefingRefine & finalize improvementsTrain process workers & stakeholders 10

Case Study

Tied to Value Stream TransformationProblem: Uneven Customer Orders

Customer

3.0 hrs.21.0 days

1.0 hrs.5.0 days

3.6 hrs.0.6 days

0.0 hrs.0.5 days

15.0 hrs.30.0 days

0.0 hrs.7.0 days

8.0 hrs. 0.0 hrs.5.0 days

0.1 hrs.26.0 days

0.0 hrs.0.2 days Total LT = 98.2 days

Total PT = 30.7 hrs.Activity Ratio = 4%

SAP

Collect Order From

Customer

Sales

LT = 15 mins.PT = 15 mins.%C&A: 99%

2

Collect Customer

Orders

Order Mgmt

LT = 15 mins.PT = 15 mins.%C&A: 99%

2B

Review & Release

Credit Holds

Sales

LT = 4 hrs.PT = 10 mins.

3Issue DO

To Transporter

Warehouse 10

LT = 4 hrs.PT = 1 mins.

4Load & Prepare Invoice

Warehouse 10

LT = 4 hrs.PT = 15 hrs.

5Collect

POD from Customer

Transporter

LT = 2 days

6Enter POD

Warehouse 10

LT = 7 daysPT = 1 mins.%C&A: 99%

7Deliver POD to

Accounting

Messenger

LT = 1 days

8 Rev iew PODfor Accuracy; Email Receipt

to Sales

Accounting

LT = 5 daysPT = 2 mins.

9

Produce Product

Plant 1

LT = 285 mins.PT = 215 mins.%C&A: 99%

3B

Pick & Stage

Warehouse 10

PT = 15 mins.%C&A: 95%

4B

Create Production

Plan

Production Planning

LT = 5 daysPT = 1 hrs.%C&A: 99%

2C

2%

Produce Product

Plant 2

LT = 285 mins.PT = 215 mins.%C&A: 99%

3C

Accept Customer e-Payment

Bank

LT = 30 daysPT = 0 hrs.%C&A: 99%

6B

Enter Payment,

Clear Billing

Accounting

LT = 2 hrs.PT = 1 mins.

11

Invoice

80%20%

Hold S&OP Meeting

LT = 1 mo.PT = 3 hrs.

1

40 Days1.5 Days Order Receipt to Ship

Monthly OrdersWk 1 = 25%Wk 2 = 25%Wk 3 = 25%Wk 4 = 25%

Prod. Plan

Prod. Plan

Pick List

Inv entory Report

Deliv er Receipt &

Collect from Customer

SalesBatch = 1x

monthly

LT = 26 daysPT = 5 mins.

10

POD

50%50%

Pick & Stage

KL

PT = 15 mins.%C&A: 95%

4C

Reduce CIP time from 4 to 3 hrs (actual: 2.5 hrs)

Explore transitioning OM to CS

Level customer demand to 25% orders each week

Resolve date discrepancy on invoice (so 30 days begins at

POD date)

Reduce soaking time from

90 to 30 mins

Obtain VOC re shipment, OE,

payments

Create web-based ordering for distributors

Direct ship from W H 10

Reduce FG inventory from

5 to 3 days

Analyze COGS & SG&A expenses to discover

opportunities for add'l reductions

Increase OEE on VMC from 62% to 70%

Increase volume of ETF customer payments from

2% to 50%

Reduce formulation C/O from 4 hrs to

2.5 hrs

Reduce # credit holds from 10% to 2%

of orders

Reduce label/pkg C/O from 20 to 10

mins

BLOCK COLOR LEGEND

Logistics / W arehouse

Sales

Order Management

Production

Accounting

BURST COLOR LEGEND

Pilot launched

In progress

Complete; goal met

Not started yet

Complete; goal exceeded

Implement pull-based inventory & production

scheduling

98%

Create mobile sales tool

Get tablet image

Incent customers to

use E-pay

Increase OEE on VMD from 60% to 70%

Future State Value Stream Map

Day 1• Team introductions• Kaizen Event Overview• Charter review• Understand the current state

• Data analysis• Voice of the customer• Root cause analysis

• Interim briefing

Weekly Shipments for Two Key Customers

0

10000

20000

30000

40000

50000

60000

70000

80000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2014 Ordering & Shipping Patterns for Customer A

Ordered Shipped

Rebate

Rebate

Rebate

0

10000

20000

30000

40000

50000

60000

70000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2014 Ordering & Shipping Patterns for Customer B

Ordered Shipped

Rebate

Rebate

Rebate

Plan = Discover80% of the reasons for uneven customer                       

orders are internally driven

10% Consumer Promotions

70%Customer Incentives

20% Sales 

Incentives

We’ve met the enemy and it is us!

Day 2• Design new sales incentive program

• Design new customer incentive program

• Vet with senior leadership

New Customer Incentives to Reduce Quarter‐End Order Spikes

20% Operations

80% Target*

50% Operations

10%Target* 

Current State Future State

Monthly invoice promotions No more monthly promotions

Rebates 3x per year No more rebatesNEW PROMOTION:2% possible discount each month• 1% from level orders in  

(25% ±10% = 22.5‐27.5%)• 1% from moving product

Sales Commission

Customer OOSReturned GoodsMust‐have SKUsEffective Outlet

Future State

50% Operations

10%SalesTarget* 

40% Even FlowWeek 1: 25%Week 2: 25%Week 3: 25%Week 4: 25%

20% Operations

80% Sales Target*

Current State

Customer OOSReturned GoodsMust‐have SKUsEffective Outlet

Planned Pilot May 1 – June 30Region 3

$15,000 if reach 100% of target$18,000 if reach 110% of target

Added  $5,000 to base salary$10,000 if reach 100% target$15,000 if reach 110% target

Week 1: 10%Week 2: 20%Week 3: 30%Week 4: 40%

Day 3• Develop “talking points” document for conversations with customers

• Develop new incentive plan detail document for sales people

• Develop pilot monitoring plan• Roll out to sales people

• Train re: how to talk with customers

• Final presentation and celebration!

Next Steps• Monitor pilot – status calls every other week with full Kaizen Event team

• Begin planning two Kaizen Events for June• Implementing pull‐based production

• Continue solving value stream problems using A3 management (as defined by transformation plan)

© 2015 The Karen Martin Group, Inc.  25

Your Questions• How did the events sustain? How did they 

communicate the new process to other team members?

• When planning for a Kaizen (Event), what are the criteria for selecting a swimlane or VSM as the best process clarification/definition tool?

• How do we decide that it is necessary to do a Kaizen event? Which indicators do we have to know/have to make the decision?

Document / Analyze the Current State• Go to Gemba / observation• Spaghetti diagrams• Work breakdown structure (manufacturing) or 

Metrics‐Based Process Mapping (office/service)• Root Cause Analysis• Surveys / audits• Videotape• “Product” samples• Floor plans / blueprints• Review of existing procedures, job aids, etc.• Interviews 26

27

Metrics‐Based Process Mapping: Eliminate Waste and Define Standard Work

www.ksmartin.com/MBPM

© 2015 The Karen Martin Group, Inc.  28

Karen Martin, President858.677.6799

@karenmartinopex

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