performance management 05 10 2001

T H E I N F O R M A T I O N A G E S T A R T S H E R E ™

Performance Management 05_10_2001.ppt CONFIDENTIAL


Performance Management

Peter Stangl

Sr. Manager

Supplier Development Operations (SDO)

May 10, 2001




Five Key Factors for Lean Enterprise Success (1)

1) A Strategic Vision

2) Strong Line Management

3) Expert Training and Support

4) Aggressive Performance Targets

5) Impatience

1) Lean Transformation, by B. Henderson and J. Larco




A Strategic Vision

Top management must be able to see how the company will be different

Vision must be held firmly in mind, and communicated to management and staff throughout the organization

Shared vision all are working toward

1) “Lean Transformation”, by B. Henderson and J. Larco




Strong Line Management

Leaders of the transformation must be chosen carefully Must have imagination to grasp the “what can be” Must be able to focus on the future and the possibilities it

holds, rather than on the past and its time-honored traditions





Expert Training and Support

May require seasoned lean transformation expert to help in at least the initial, start-up and training phase

After training, those left in charge should have enough knowledge to be self-correcting and lead project core team(s)

Use of steering committee as a sounding board for the core team(s)





Aggressive Performance Targets

People need to know what is expected of them This might take the form of goals and objectives to shoot for





Impatience

Impatience by management to see the organization move ahead and deliver tangible results

Impatience means foot-dragging will not be tolerated In its most productive form, impatience should translate into a

fire that is lit under the organization to realize the vision





Five Key Factors for Lean Enterprise Success (1)

1) A Strategic Vision

2) Strong Line Management

3) Expert Training and Support

4) Aggressive Performance Targets

5) Impatience





Why Aggressive Performance Targets?

Proactive key process indicators (KPIs) and an Annual Operating Plan (AOP) are suggested methods of tracking a plant’s metrics. Develop KPIs that calibrate the effectiveness and efficiency of the new lean processes. The object is to track the sustainability of process improvements.

If metrics begin to fall off, a maintenance project must be developed to avert a cycle of improvement followed by a backsliding in performance.




Possible Metrics (Balanced Score Card)

Output - To Customer Quality On Time Delivery Finished Goods Inventory

Internal Efficiency Scrap Labor Effectiveness Cycle Time Floor Space Workplace Organization Work In Process Inventory Overall Equipment Effectivess

Continuous Improvement Employee Suggestions adopted Kaizens Implemented Rate of Improvements




Suggested Format for

Performance Review




Application

By Plant By Product Line Monthly Cross Functional Team




Tactical MetricsProject Metrics and Cost SavingsOn-time Delivery Inventory- Weekly Trend of FGsQuality PPM (13 and 5 weeks)Manufacturing Cycle TimeCapacity

Production System Score by site

Strategic ImprovementsFuture State Value Stream MapSupplier Quality Road Map

SummaryWhat has been doneWhat needs to be done

Performance Management Meeting




Sample of Performance Data Review

Company Name:

CATEGORY METRIC GOAL BASELINE ACTUAL MO. 1ACTUAL MO. 2ACTUAL MO. 3 ACTUAL MO. 4 ACTUAL MO. 5 COST BENEFITDate Date Date Date Date Date

Data AMAT Business Revenue ($$) N/AData Direct Labor Rate (include benefits, etc.) N/A

AOP On Time Delivery (PPM)AOP Quality (PPM)AOP Avg. Lead Time (Internal) **

KPI Data Montly Revenue($)KPI Data Raw Material Inventory (RMI)($) $0.00KPI Data Work In Process (WIP) ($) $0.00KPI Data Finish Goods Inventory (FGI) ($) $0.00KPI Data Throughput(One Day's output) ($)KPI Data Monthly Labor Burden(hrs)KPI Data Montly Overtime Burden (hrs)

Capacity # of jobs processed (given time period) $0.00Capacity # Processes (Equipment) $0.00Capacity # Headcount (Labor) * $0.00

Misc 5S Team $0.00Misc Safety/Ergonomics - If Applicable $0.00Misc Floorspace - If Applicable $0.00Misc Specific Kaizen - If Applicable $0.00

Definitions* Headcount is Direct Labor Only and INCLUDES overtime** Avg. Lead Time = Upfront Cycle Time + Material Cycle Time + Mfg Cycle Time

OTHER DATA (Not all may be applicable)Overhead Costs Building Rent, Utilities, Maintenance, Insurance, etc.Cleanroom/Non-Cleanroom Costs $$ per square footInventory Burden Carrying Cost PercentageCost of Direct Labor (per person) $$ per hour (includes wages, taxes, insurance, benefits, etc.)Percentage of business Percentage of Line business to total businessPull History of P/N's - Finished Goods Minimum 13 weeks Pull History by part number - Finished GoodsPull History of P/N's - Raw Materials Minimum 13 weeks Pull History bypart number - Raw MaterialsCost Per P/N $$ per P/N PiecePlant Layout (drawing) Drawing of Plant Layout Contract P/N List (Type 1 & 5) List of Type 1 & 5 Contract P/N's (SMO)Direct Ship P/N List Contract P/N's that are Direct Ship (Carl Rossi)Forecast of P/N's Rolling Forecast for P/N'sContract Liablity for P/N's Contract Min/Max requirements by P/NP/N Process Steps Mfg process steps for each P/NP/N Lot Sizes (Internal/External) P/N Lot Sizes both Internal and External (Secondary Processing)




Delivery PPM by Site

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

1 MO 2 MO 3 MO 4 MO 5 MO 6 MO 7 MO 8 MO 9 MO 10 MO 11 MO 12 MO

Months

De

leve

ry P

PM

Monthly PPMs Goal PPM fit (exponential)

Exam

ple




13 & 5 Wks Quality PPM’s by Site

0

1000

2000

3000

4000

5000

6000

1 2 3 4 5 6 7 8 9 10 11 12

Month

Qu

ali

ty P

PM

Quality PPM 5 wks Quality PPM 13 wks Goal (600 PPM)

Exam

ple




Total Cycle Time Metric by Site/Value Stream

0

1

2

3

4

5

6

7

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

Date

we

eks

Cycle Time Goal

Exam

ple




Weekly Trend - %Min Finish Goods

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120

week

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Date

FG

Pe

rce

nt

FG (percent) BTP Average Goal FG Trendline (ln fit)

Exam

ple




Weekly Backorder by Line Item

0

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Date (weekly)

# L

ine

s o

f P

art

s

Lines of backordered parts Trendline (Exp fit)

Exam

ple




Production System Score

•Baseline Score _______________________ 459

•Current Score ________________________ 575

•Project Target Score ___________________ 683

Exam

ple




Capacity

Capacity Review Should Include– Facilities– Equipment– Material & Supply Base– Labor both Direct and Indirect




Current/Future State Value Stream Map




Sample Improvement Roadmap

AOP GOALS Quality PPM: Delivery PPM: Cycle Time:

Orig

Completion StatusImprovement Activity Status

What goal w ill this

improvement impact ?

COMMENTS ( Provide Details for Red or Yellow Status) Note: Use

additional sheets if more space is needed

ACTUAL Quality PPM: Delivery PPM: Cycle Time:

Act

Next Level Detail?

Project/Task Owner

Planned Start Date

Planned Completion

Date

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Green - On Target Yellow - At Risk

Red - Will be Late

Qu

alit

y

Del

iver

y

Cyc

le T

ime

Improvement Activity

COMMENTS ( Provide Details for Red or Yellow Status) Note: Use

additional sheets if more space is needed

Issue / Problem Planned Remedy




Improvement Roadmap

Defect Pareto

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Number Cumulative % of tot

Parts Pareto

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Defect Part # Description Qty. Discrepancy Root Cause ECD Corrective Action




Performance Review

•Summary

•Next Steps




You Own Your Performance

Primary supplier owns quality, delivery, cycle time to AMAT, You were awarded the business with this understanding.

Special Process Suppliers Sub-tier suppliers Transportation/Distribution

Excuses




Questions ?

performance management 05 10 2001

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