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Lean Management feat. Oasis Simulation

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© Philippe Leliaert (SyntaxisNetworking) 2003-2013

Slide 3

how to measure/report your performance ? as a taxi driver/company …

(5 minutes)

what do you measure ?

how do you measure it ?

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Slide 4

shortest

route

fastest

route

save petrol

short

waiting

times Safe / courteous

driving

clean

interior

nicest

route friendly

conversation

Meeting & exceeding Meeting & exceeding

expectationsexpectations

ImageImage Process Process

PerformancePerformance

Cost Cost

SavingSaving

number of

fares

total

revenue

IncomeIncome


Slide 5

• Aims are:

– Generating Income

– Eliminate waste (of resources)

– Improving Business Performance

– Building Brand Image

– Meeting & Exceeding Customer Expectations

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Slide 6

• How to measure:

– Save petrol

– Shortest route

– Fastest route

– Clean interior

– Pleasant conversation

– Nicest route

– Shortest waiting times

– Safe/courteous driving

… liter/km

… km/fare

… km/hr

… checks/day

… minutes talked

… sights/trip

… minutes/fare

… accidents/week


Slide 7

FHRLAP_SPM_v3.0

Lean Management

09:00 introductions

09:30 traditional performance management – OASIS simulation

10:45 BREAK

11:00 failure of traditional performance measures

11:30 the strategic imperative

12:30 LUNCH

13:30 towards Operational Excellence with Lean Management

16:30 Lean Management in 5 steps

17:30 END

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Slide 8

Lean Management

09:00 recapitulation day 1

09:15 towards a mindset for Operational Excellence

dilemma

10:30 BREAK


team models, tower build

12:30 LUNCH


Safety Boat, Frame Build

15:45 BREAK

16:00 application to your own environment

17:30 END


Slide 9

Balanced Scorecard

Vision

&

Strategy

Process View

build on internal strengths

continuously improve

Customer View

satisfy & retain customers

Finance View

provide shareholder returns

Innovation View

promote org’l learning,

growth & development

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Slide 10

lagging

leading

Balanced Scorecard

financial

customer process

(business)

innovation & growth (people)

development

YESTERDAY

TODAY

TOMORROW


Slide 11

FHRLAP_SPM_v3.0

Balanced Scorecard

• Focus too much on financial performance

(=lagging effects)

• More focus needed on achieving strategic

objectives (= vision of future)

• Link needed between strategy & performance

system (=alignment)

• conclusion:

Need to envision “the future” not “the past”

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Slide 12

FHRLAP_SPM_v3.0

• Performance Management needs to balance Financial, Customer, Process and Growth/Development indicators, (the 4 or 5 perspectives)

or measures of past, present and future

• ... but also indicators of effort and result.

Key Key LessonLesson


Slide 13

Critical Success Factors (CSF)

What you must unquestionably do (i.e. effort)

ór realise (i.e. output) to achieve a strategic

objective

critical effort

inputs

critical

outputs

effort outputs

strategic

objective

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Slide 14

Key Performance Indicators (KPI)

Quantifying critical efforts and outputs: example

train employees

budgets

competent staff

best-in-class service delivery

# training hours

% completion

of PDP's

# qualified staff

% match between

job content and

competences


Slide 15

FHRLAP_SPM_v3.0

Balanced Scorecard

Objective of BSC implementation should be that

• every employee (at every level) …

– understands the relevant parts of the strategy

– has his/her own activities in line with the

organisation’s objectives

– spends more time on business-critical activities

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Slide 16

FHRLAP_SPM_v3.0

Balanced Scorecard

Objective of BSC implementation should be that

• the whole organisation …

– has scorecards from top to team to individual

– has a systematic performance management review

policy that supports the generation of action plans at

all levels

– is able to instantly communicate change

– can rapidly amend strategies


Slide 17

FHRLAP_SPM_v3.0

Benefits of BSC

• Target-setting is done from every perspective

– Balanced follow-up on performance

– Enables fast reaction to changes

• Identifies business drivers

– Moves the focus from only financial figures to those

figures that impact organizational performance

– Management focus is transferred from reactive

management to proactive management

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Slide 21

Customer Value Proposition

"best product"

product leadership

operational excellence "best quality/price"

customer intimacy "best total solution"

based on Treacy M, Wiersema F (1992) "Customer Intimacy and Other Value Disciplines", HBR


Slide 22

Customer Value Proposition: Operational Excellence

• A combination of quality, price, and ease of acquisition second to none

• Few if any product/service innovations; do not cultivate one-on-one customer relations

• Aim for standard execution/delivery in high volumes

• Examples …

Dell Computers – EasyJet – McDonald – Hertz – Toyota


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Slide 23

Customer Value Proposition: Customer Intimacy

• Does not supply what ‘the market' wants, but what specific customers want

• Base their business on a thorough understanding of their customers and what they need

• Deliver products/services made to measure, at reasonable prices

• Examples …

McKinsey – Amazon



Slide 24

Customer Value Proposition: Product Leadership

• Continuously strive to deliver innovative products or find new applications for existing products and services

• Always seek to discover new avenues

• Bring creative, new ideas fast to market

• Examples …

Nike – Swatch – Sony – Apple Computers


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Slide 25

Customer Value Proposition

Operational Excellence • Reliable products/services at competitive prices,

made available with minimal cost and efforts

• “The best quality/price"

Customer Intimacy • Best total solution, adapted to customer needs

• Not just a product/service but an “experience"

Product Leadership • “The best products"

• Products that continually supersede de "state-of-the-art"



Slide 26

Discussion

• Which Strategic Value Proposition

do you offer?

• What does that imply for

– the way you are organised / structured ?

– your management systems ?

– your organisational culture ?

12


Slide 27

leadership vs threshold

product differentiation

operational competence customer responsiveness

"best product"

product leadership

operational excellence "best total cost"

customer intimacy "best total solution"



Slide 28

FHRLAP_SPM_v3.0

• All companies and organisations must deliver a minimum level of operational excellence, AND customer intimacy AND product leadership.

• These thresholds may be called

– Operational competence

– Customer responsiveness

– Product differentiation

Key Key LessonLesson

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Slide 29

29

Lunch Break


Slide 30

Why are you here?

• Lean Management concepts starting

to be noticed & applied outside production

environments

• First introduction to

Lean Principles & Practices

14


Slide 31

What is Lean?

• Toyota Production System (TPS)

– Revolutionised manufacturing

(Ford vs Toyota)

– Now applied to different areas

• Google, Dell, Zara, Nike, ...

• Product Development

• Supply Chain Management

• Software Development

• Healthcare

• Hospitality

• ...


Slide 32

What we want to show

• Push and Pull Systems

• Kanban

• Systems Thinking

• Flow

• Heijunka

• Yatai (work cell)

and much more ...

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Slide 33

Lean LegoTM Game

• Simulating a production line

Credits: Danilo Sato & Francisco Trindade

Hands-on

Results

Debriefing


Slide 34

Hands On – 1st Step

• Let’s simulate a production line ...

Task 1 Task 2 Task 3 Task 4 Task 5

• 4 teams

• 4 rounds of 40 seconds

• Follow the instructions

• Build ‘houses’

• 1 piece = €1.00

• 1 house = €25.00

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Slide 35

Stay Motivated !

DO IT

RIGHT

FIRST

TIME

QUALITY

WORKER


Slide 36

What went wrong ?

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Slide 37

Muda (Waste)

• Visible inventory

• Over/under production


Slide 39

Push vs Pull Systems

• Push System: upstream information

Expected

Demand

Mass

Production

Economies

of Scale

“you can have any colour you like, as long as it’s black ...”

(Henry Ford)

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Slide 40


“All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash.” “And we are reducing the time line by reducing the non-value adding wastes.”

Taiichi Ohno, The Toyota Production System: Beyond Large-Scale Production, Productivity Press, 1988


Slide 41


• Push System: upstream information

Expected

Demand

Mass

Production

Economies

of Scale

• Pull System: downstream information

Customer Requirements

On Demand

Production Adaptation

19


Slide 42

Kanban

• Physical device, that ...

• ... signals demand to downstream processes

• ... regulates demand on a pull system

• ... limits Work in Process (WIP)

• ... aids visual control

• ... is self-directing


Slide 43

Kanban

Process A Process B

Buffer

IDLE FULL WORKING

20


Slide 44

Kanban

Process A Process B

Buffer

IDLE WORKING

Kanban


Slide 45

Kanban

Process A Process B

Buffer

WORKING WORKING

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Slide 46

Kanban

Process A Process B

Buffer

IDLE FULL WORKING


Slide 47

Hands On – 2nd Step • Using Pull and Kanban

– Set up minimum buffers at intermediate steps

– Demand comes first

– Items are produced to fill gaps in buffers

Task 1 Task 2 Task 3 Task 4 Task 5

• 4 rounds of 40 seconds

22


Slide 48

Stay Motivated !

DO IT

RIGHT

FIRST

TIME

QUALITY

WORKER


Slide 49

What went wrong ?

23


Slide 50

Unleveled Process

• Another type of waste

• Some people working more than others

• Mura (unevenness: stop/start or slow/fast )

Heijunka (production levelling / smoothing)


Slide 51

Flow

• Ultimate goal is a leveled process

• Production line must be a continuous flow

• One piece is bought when one piece is delivered

• Sustainable pace

Minimise fluctuations by reducing production

batch size

Minimise change-over times (set-up times)

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Slide 52

Systems Thinking

• Why does it still feel wrong?

• What are the other teams doing?

• What is the purpose of the system?

“a bad system will beat a good person every time...”

(W. Edwards Deming)


Slide 53

Let’s experiment

• Do we need 4 teams to build a house?

• Teams 1 and 2 have overlapping tasks!

25


Slide 54

Yatai (work cell)

• Multi-skilled worker

• Single piece flow


Slide 55

Hands On – 3rd Step

• Using Work Cells

– Each person builds a house

– Round of 160 seconds

– Signal (raise your hand) when you finish your house

Build house Sell house

26


Slide 56

Stay Motivated !

DO IT

RIGHT

FIRST

TIME

QUALITY

WORKER


Slide 57

What went wrong ?

27


Slide 58

Kaizen

• Continuous improvement

• Reflect and adapt

• Learn by standardising

• Long term thinking

• Respect people

Plan Do

Act Check

“Toyota’s real advantage was its ability to harness the intellect of ‘ordinary’ employees”

(Gary Hamel)


Slide 59

Improving the Process

It’s your turn

to help us

improve the process

28


Slide 60

Hands On – 4th Step

• Discuss your own work process • 1 round for each team

Team A Team B

Team C Team D


Slide 61

Stay Motivated !

DO IT

RIGHT

FIRST

TIME

QUALITY

WORKER

29


Slide 62

Results

Push System

Kanban – Pull System

Yatai

Team’s Process


Slide 63

Is that all ?

• We saw some of the practices

• Practices are contextual

• Underlying principles must be

understood

30


Slide 64

What is LEAN ?

Myth what TPS is NOT

Reality what TPS IS

A tangible recipe for success A consistent way of thinking

A management program or project A total management philosophy

A set of tools for implementation Focus on total customer satisfaction

A system for production only An environment of teamwork and

improvement

Implementable in a short- or mid-

term

A never-ending search for a better

way

Quality built in process

Evolutionary


Slide 65

Principles of Lean

• Specify what is of VALUE to the customer

• Identify the VALUE STREAM

• Create FLOW

• PULL demand

• Aim for PERFECTION: continuous

improvement

31


Slide 66

Types of Waste

• Muda – poor process (waste, rework)

• Mura – inconsistency / unevenness

• Muri – unreasonable / burden

(working beyond capacity)


Slide 68

7 wastes of Manufacturing

Image source: http://upload.wikimedia.org/wikipedia/en/5/5e/The_8_Wastes_-_DOWNTIME.jpg

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Slide 69

5s : workplace organisation

• Sort (Seiri – organise)

• Straighten (Seiton – orderliness)

• Shine (Seiso – neat, clean)

• Standardise (Seiketsu – immaculate)

• Sustain (Shitsuke – discipline)


Slide 70

Image source: http://beyondlean.wordpress.com/2011/09/07/keys-to-sustaining-5s/

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Slide 71

Image source: http://reliabilityweb.com/index.php/articles/the_5s_method_of_improvement_-

_enhancing_safety_productivity_and_culture/

Image source: http://solutions.wolterskluwer.com/blog/2011/03/yes-to-5s-anywhere-anytime//


Slide 72

Image source:http://info.marshallinstitute.com/?month=4&year=2011

34


Slide 73

Image source: http://reliabilityweb.com/index.php/articles/the_5s_method_of_improvement_-

_enhancing_safety_productivity_and_culture/


Slide 74

Poka Yoke

• Poka = unintended error

• Yoke = to avoid

Image source: http://www.wisegeek.com/what-is-a-sim-card.htm

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