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GE

Capital Solutions

LEAN Workshop
October 2006
Sharon Garavel, SVP Quality & Operations Raj Wadehra, Lean & Originations Process Leader Ryan McMillian, ACFC Lean Leader
GE PROPRIETARY INFORMATION
The information contained in this document is disclosed in confidence to GE customers/partners. It is the property of the General Electric Company and should be used only within your company this notice shall appear on any reproduction, in whole or in part. It should not be disclosed to others without the expressed written consent of the General Electric Company.
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LEAN Workshop Agenda


Change Management at GE LEAN Principles LEAN for Knowledge Flow LEAN for Manufacturing Launching LEAN at GE Sharon Garavel Raj Wadehra Raj Wadehra Ryan McMillian Sharon Garavel

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GEs change culture: A Continuing Journey


2003

2005 2004

Lean Six Sigma


Speed & Quality

Strategy & Growth:


IBs, CECOR, Lean, Customer Centric, Execution

Imagine, Solve, Build, Lead Using Change as a Strategic and ACFC (At the Customer For the Customer): 2000 Faster, Better, Closer to the Customer Competitive Advantage Digitization: 1998 Sell, Buy, Make using Technological Tools Optimizing Change Six Sigma Quality: Effectiveness 1996 Productivity, Span, Data-Driven Decision-Making Make Customers Winners: Building a Culture that GE Tool-Kit Drives Change Key Strategic Initiatives: QMI*, NPI*, OTR*, SP*, Productivity, Globalization

Imagination at Work:

1992

Change Acceleration Process (CAP):


Increase success and accelerate change

Process Improvement:
Process-mapping, re-engineering, Bullet Train Approach

Productivity / Best Practices:


Benchmarking External Organizations, Sharing Best Practices

1989

Work-Out / Town Meetings:


Empowerment, action Expert-Driven Decision-Making, Action Work-Outs, Customized Work-Outs * New Product Introduction, Quick Market Intelligence, Order to Remittance, Supplier Partnership
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Lean Six Sigma


Lean Doesnt Replace Six Sigma But Complements It Same Goal = Continuous Process Improvement for Growth & Customer - Business Process Ys: NPI, ITO, OTR
Lean Reduce Waste Decrease Cycle Time to increase capacity and customer loyalty Continuous Process Improvement Intuitive and proven solutions Six Sigma Defect Reduction Remove variability to increase output and customer loyalty Control keeps process defect free Need Analytics to Find Problem
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Evolution Of LEAN Six Sigma At GE

1995
GE Launches Six Sigma Throughout Company
Focus : Core Activities Objective : Productivity & Asset Utilization

Evolution
PRODUCTIVITY

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Evolution Of LEAN Six Sigma At GE

1997
GE Turns to Six Sigma For New Products
Focus : New Product Design Objective : World Class Capability in the Market Place

Evolution
PRODUCTIVITY PRODUCT DESIGN

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Evolution Of LEAN Six Sigma At GE

1999
GE Turns Six Sigma Loose at the Customer
Focus : Customer Productivity & Value Added Services Objective : Revenue Growth & Share Shift

Evolution
PRODUCTIVITY PRODUCT DESIGN CUSTOMER FOCUS

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Evolution Of LEAN Six Sigma At GE

2001
Six Sigma Leadership Critical to Success
Focus : Developing Future Six Sigma Leaders Objective : Common Company Wide Training & Certification

Evolution
PRODUCTIVITY PRODUCT DESIGN CUSTOMER FOCUS THE WAY WE WORK

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Evolution Of LEAN Six Sigma At GE

2003
Enabling Growth
Focus : NPI, ITO, OTR, ACFC Objective : Improve/Digitize Key Processes & Free Up Resources for Growth

Evolution
PRODUCTIVITY PRODUCT DESIGN CUSTOMER FOCUS THE WAY WE WORK ENABLE GROWTH
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Enabling Growth
Customer Focus
PRODUCTIVITY

Customer Focus

PRODUCT DESIGN

CUSTOMER FOCUS

THE WAY WE WORK

ENABLE GROWTH

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Net Promoter Score (NPS)


Links Customer Loyalty to Business Performance Drives growth through improved customer focus On a scale of 0 -10, how willing would you be to recommend GE to a colleague?

9 - 10 Promoters 7-8 Passively Satisfied

10 9 8 7 6 5 4 3 2 1 0

% Promoters

% Detractors

% Net Promoters

06 Detractors

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LEAN Principles

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Batch vs. Flow Simulation


Batch Processing
First person writes their name on all post-it notes. When finished signing every post-it in the packet they hand off to the next person. Then 2nd person writes their name on all post-it notes and hands complete batch to the next person. Continue until last person has finished signing all post-it notes.

Flow Processing
First person writes their name on one post-it notes and hands to second person as soon as theyve finished signing one post-it. While the second person is signing the 1st post-it, the first person begins signing the 2nd post-it note. Continue until last person has finished signing all post-it notes.

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What Is LEAN?
Defines Value from the Customers perspective.
The relentless pursuit of the perfect process through Waste Elimination. Minimize Material or Information Flow Time from Start to Finish Process/Goods.
All we are doing is looking at a time line from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value added wastes Taiichi Ohno

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Understanding & Eliminating Waste


Lean can deliver impact to nearly any process
Before
Cycle time or lead time

Driving improved customer satisfaction


Reduced cycle times Better delivery More capacity Better quality Higher productivity

After

Cycle time or lead time

Lean attacks waste here

Work: Value added time

Wait time/waste: Non-value added time

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Why LEAN?
Eliminate waste >Deliver exactly what customers need exactly when and where they need it >Eliminating all that does not add value in the eyes of the customer

Change the culture

>Reinforce a performance culture and sense of urgency; learn by doing >Tied to clear goals, and real consequences

Grow the business

>Optimize service, cost, and asset productivity >Segment, integrate, and accelerate information flows throughout the business >Employ proven tools to eliminate waste, manage variability, and synchronize flows >Deploy cross-functional problem-solving teams throughout the organization, driving to measurable, actionable solutions

Improve performance

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Toyota Production System


TOYOTA
Toyota Production System Just-in-Time Jidoka
Single Piece Flow Pull Production TAKT Time Production People People People Autonomation Built-In Quality Stopping at Abnormalities

Heijunka
Level Loading Sequencing Stability
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TPS House - Heijunka


What is Heijunka?
Heijunka is the foundation of the Toyota Production system, and is the process of leveling and sequencing an operation.

There are three main elements of Heijunka


2. 3. 4. Leveling: Overall leveling of a process to reduce variation in output Sequencing: Managing the order in which work is processed (Mixed Production) Stability or Standard Work: Reduce process variation
Customer Demand

Leveling

Heijunka

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TPS House - Jidoka


What is Jidoka?
Jidoka allows machines/processes to operate autonomously by shutting down automatically if an abnormality occurs. This prevents defective products from passing to the next process.

There are two main elements of Jidoka


2. 3. Autonomation: Automation with human intelligence operate autonomously Stop at Every Abnormality

Normal

Abnormal
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TPS House - JIT


What is Just-in-Time?
Just-in-Time provides the customer what is needed, when it is needed, in the quantity it is needed.

There are three main elements of JIT


1.
2. Single Piece Flow: Completing the process from start to finish continuously. Pull Production: A system in which each process takes what it needs from the preceding process when it needs it and in the exact amount needed 3. TAKT Time: Available time / required output (actual or forecasted demand ) e.g. 1 shift = 1980 min/wk, forecast = 198 units/wk TAKT Time = 1980 min/wk / 198 units/wk = 10 min/unit
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Lean Thinking Principles


Define value from the customers perspective and express value in terms of a specific product Map all of the stepsvalue added & non-value addedthat bring a

1 Specify Value 5 Work to Perfection


Complete elimination of waste so all activities create value for the customer by continuous improvement

2 Map the Value Stream

product or service to the customer

3 Establish Flow
Continuous movement of products, services & information from end to end through the process

4 Implement Pull

Nothing is done by the upstream process until the downstream customer signals the need

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1. Specify Value
Value can only be defined by customer Product Flow: Value changes the form, fit and function of the product. Knowledge Flow: Value adds necessary knowledge or information.

Incidental Work
Does not add value, but required by the business (eg. Taxes)

Non-Value Added Activity


Adds no value to the customer.simply raises costs in our business!

Value Added Activity


Any activity that changes the form, fit, or function of materials or information to meet customer requirements - OR - something customers are willing to pay for

Typical Process: 5-10% Activities Value-Adding


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2. Identify the Value Stream


The VALUE STREAM is a time series of all activities & steps (both value add and non-value add) required to bring a product or service to the customer The VALUE STREAM cuts across functional Boundaries GE focuses on 3 main VALUE STREAMS 1 NPI
New Product Introduction

2 ITO
Inquiry to Order

3 OTR
Order to Remittance

Most Value Streams have less than 5% Value Add Time


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2. Identify the Value Stream


Current State

A 2 hours process is taking us 63 days!

Future State
6-9 Month Roadmap

Goal: Reduce 63 day lead time to 27 days!

Typical Cycle Time Improvements > 50%


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3. Flow
Batch Production

5 Orders 3 Process Steps 1 Hour per order/operation

Flow Production

A
Operator 1

B
Operator 2

C
Operator 2

A B C

5 Hours

5 Hours

5 Hours

Time for First Order = 15 Hours Time for Last Order = 15 Hours

Time for First Order = 3 Hours Time for Last Order = 7 Hours
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4. Pull
Customer initiates business process Produce only what is required by the customer Each step in the process takes the product and adds knowledge it needs, as it is needed No action is taken until the downstream process initiates it to prevent batches and queues
One more please!

Okay

supplier

customer
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5. Improve To Perfection
Goal: perfect process Tools allow you to see & eliminate waste There is always more waste True continuous improvement philosophy Next Future State Future State Current State

Original State

The perfect process is a continuous flow of customer value add, without interruption
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The Seven Types Of Waste


Over Processing Waiting Motion
Waiting Transportation

Inventory Moving Things Overproduction Defects/Inspection

Overproduction Inventory

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Value Stream Mapping

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What Is A Value Stream?


SUPPLIERS YOUR PROCESS CUSTOMER

TOTAL VALUE STREAM

A value stream shows all the tasks (Value and Non-Value) required to bring a product, service, or capability from start to customer delivery

Value streams cut across functional boundaries


Most value streams have ~5% value add time (rest is waiting time)
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Value Stream Maps vs. Process Maps


Value Stream Maps (VSM)
Customer focused Look at the end-to-end value stream Helps us to visualize flow Helps see waste and its source Becomes the blueprint for improvement Shows the linkage between information and physical flows Reality Map

Traditional Process Maps


Functional Focused Varies in scale from Macro to Micro functions Used to understand the steps in a process No value judgments made Used for continuous improvement, business planning, scoping or establishing boundaries of what and where Planned Map

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Creating a Current State Value Stream Map


1. 1. 1. Define Start and Stop Points Add process steps Collect Data
PARTNER RIGHTFAX GENPACT

1. 1. 1.
EXPERIAN/ EQUIFAX

Map information flows Create cycle time ladder Identify the Waste
LEGACY SYSTEMS PARTNER

Customer calls and provides credit application information


Daily demand Process Time Inventory Yield
5 Mins

Submit credit info to Credit Department

Enter Deal Into Sales locates Autodecision and sends to W Decisioning W 40 Mins 90 Mins customer tool
Daily demand Process Time Inventory flow stops and Yield
7 Min

Customer receives credit decision W ~240 Min notification


Daily demand Process Time Inventory Yield
~240 Min 1 Min
Processing Time Typical Cycle Time 14 mins

Daily demand Daily demand Process Time Process Time Process Box Inventory Inventory A point in the value stream at which Yield Yield
1 Mins 40 Mins 0.2 Min 1 Min

inventory has the opportunity to accumulate


90 Mins

Train sales to enter deals

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Future State VSM Mapping


Future state map is the desired next stage in the continuous improvement journey. Once we reach the desired next stage, future state map will become the current state map and a new future state map should be created so that we keep moving closer to perfection

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Creating The Future State


Fundamental questions to ask
Where can I eliminate process steps entirely? Where can I combine steps & create flow? Where do I need to create pull? Where can I execute process steps in parallel (or move processes from critical path) Which steps are creating waste for other steps in the process? CONTRAINTS
No large IT projects (think excel macros not ERP systems) No capital outlay No additional resources (resource re-allocation is OK) Realistic: needs to be completed within 3-9 months
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Defining Action Workout Teams


current state

Kaizen Team #1

Kaizen Team #2

Kaizen Team #3

Kaizen Team #4

future state
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Value Stream Map Utilization


Effectively Analyzing a VSM to Improve the Manufacturing Process

Ryan McMillian ACFC Lean Leader

Scope of LEAN In Manufacturing?


A Focused Strategy to:
Eliminate Waste Increase Speed Reduce Variation Reduce Cost Simplify the Process

Consistently Meet Customer Requirements All we are doing is looking at a time line from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value added wastes Taiichi Ohno
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The Value of a Value Stream Map


Forging Vender

6-week Forecast

Production Control

90/60/30 day Forecast Daily Order

Free Ride Airlines


38,000 pcs/mo -20,000 LB -18,000 SB Tote = 20 parts

2 shifts Daily

Daily Schedule

Flow Problems

Long Set up

High Scrap
Cutting Laser

OXOX
Too Much Inventory
Finish

Daily

I
1900 pieces LB 1900 pieces SB 2 days

Issue

Final & Ship

19 pieces LB
C/T=5.5 min C/O=0 min. 3 SHIFTS VA= .5 min 0% SCRAP Up Time = 100% C/T=120 min C/O=240 min 3 SHIFTS VA=7 min 10% SCRAP Up Time = 80% C/T=1445 min C/O=15 min. 3 SHIFTS VA=5 min 5% SCRAP Up Time = 98% C/T=2880 min C/O=0 min. 3 SHIFTS VA=1500 min 0% SCRAP Up Time = 99% C/T=720 min C/O=0 min. 3 SHIFTS VA=72 min 1% SCRAP Up Time = 100%

Machine Issues

1900 pieces

1900 pieces

62% Queue 2172 min 5770 min

.5 min 2880 min 5 min

7 min 5 min

5 min 1440 min

1440 min 1440 min

720 min

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VSM & TPS Work Together


THE HOUSE OF TOYOTA

TPS
Pull Production Single Piece Flow Takt Time Production Leveling Stop @ Abnormality

JIT

Jidoka

Autonomation

Heijunka
Sequencing
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VSM Helps Identify Current State and Prioritize an Improvement Plan TPS are Tools for Improvement
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Breaking Down Value Stream Map Cutting

C/T=120 min C/O=240 min 3 SHIFTS VA= 7 min 10% Rework Up Time=80%

Cycle Time Change Over Time Value Added Defect Rate Process Up Time
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Breaking Down VSM Flow Cutting

Tools
Spaghetti Chart 5S Standard Work Cell Formation

C/T=120 min Cycle Time C/O=240 min 3 SHIFTS VA= 7 min Value Added 10% Rework Up Time=80%

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Spaghetti Chart
Previous Flow Chart New Flow Chart

4 8 4 3 1 7

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5S Workout
Ensure that the workplace contains only what is needed, when it is needed and where it is needed Quickly, any abnormalities can be detected Minimal time is spent on nonvalue added activities A way to see and eliminate waste
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Before

After

5S Improvement
Planning

Tools

Material

Cart

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Summary Flow Improvement


Old Process 2 Hours

Tools Spaghetti Chart, 5S

Results 12 minutes

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Breaking Down VSM Setup Cutting

Tools
Setup Reduction

C/T=120 min C/O=240 min. Change Over Time 3 SHIFTS VA= 7 min 10% Rework Up Time=80%
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Setup Reduction
Finish part A SETUP PART A PRODUCTION PART B PRODUCTION SETUP Make and Inspect B Finish part A Make and Inspect B

PART A PRODUCTION

PART B PRODUCTION

INTERNAL : You must shut the machine off to perform Changing chuck jaws Changing dies Changing inserts Adjustments to dial in

EXTERNAL : You can perform while the machine is running Pre accumulate tooling Installing / replacing inserts Getting paperwork together Setting tool heights
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Set Up Reduction Example


Establish Visual Controls

After

Before

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Change Over Benchmark


1) Internal Vs External 2) All tools and equipment are at arms length 3) Standard work has been practiced to perfection 4) Continuous observation and analysis drives continuous improvement Types of Waste Eliminated Searching Finding Selecting Transporting Waiting

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Summary Setup Improvement


Old Process 4 Hours

Tools 5S, Internal to External

Results 27 minutes

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Breaking Down VSM Quality Cutting

Tools
Build Quality In Poka Yoke

C/T=120 min C/O=240 min. 3 SHIFTS VA= 7 min 10% Rework Up Time=80%

Six Sigma

Defect Rate

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Six Sigma Tools


Before Process Capability After Process Capability

Find Top Problems Pareto Standardize the Process


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Summary Setup Improvement


Old Process 10% Rework

Tools Six Sigma Analysis

Results 0.7% Rework

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Breaking Down VSM Machine Up Time Cutting

Tools
Preventative Maintenance

C/T=120 min C/O=240 min. 3 SHIFTS VA= 7 min 10% Rework Up Time=80%

Process Up Time
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Preventative Maintenance
Machines Deteriorate Over Time Maintenance Should Be Preformed in the Beginning Stages of Deterioration You can pay me now (with short daily CCO)...or pay me later (with poor quality, lots of downtime, high maintenance costs, etc...)
CCO Checklist
Machine #: General - Nuts/bolts loose, wobbly or missing? - Any play in moving parts or fixture mounting section? - Any unnecessary items on the body of the machine? Lubrication - Are oil levels correct? - Does oil reach sliding parts? - Any oil leaks from supply devices, pipes, fittings? Pneumatics - Pressures gages in proper range? - Any stop valve, ball valve leaks? - Air flowing through closed valves? Badge/Date

Sample CCO Checklist

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Results
Old 120 240 10% 80% New 12 27 0.7% 100% Improvement 90% 89% 93% 20%

Cycle Time (min) Setup Time (min) Defect Rate Process Up Time

Increased Capacity for Customer Growth Significant Cash Savings to the Business
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Launching LEAN at GE

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Toyota and Dell have demonstrated that cycle time reduction in core customer facing processes drives growth
Toyota vs. US auto industry Growth (CAGR) Revenue Earnings Lean focus Inventory turns NPI cycle time 8% vs. 3% 24% vs. 0% Every 2 hrs vs. 30% faster Dell vs. PC industry 28% vs. 3% 33% vs. 10% 5 min. vs. 11 days

but how do we make it work for us??


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Keys To Success At GE
1. Select the Right Process
(ITO,OTR, NPI)

4. Select the Right Business


(Showcases)

7. Select the Right Approach


(Lean Workshops)

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Focus On External Process To Drive Growth


Innovate Better: New Product Introduction
What happens if Engines takes NPI cycle time from 24 months to 18 months? What happens if Healthcare can create breakthroughs in 1 year instead of 2?

Sell Better: Inquiry to Order


What happens if Commercial Finance can offer financing to a CFO of a mid size company in the first meeting? What happens if Healthcare could propose a DI solution in the first meeting with a radiologist?

Fulfill Better: Order to Remittance


What happens if Wind responds to an order in 1 month instead of 6 months? What happens if Plastics can consistently respond to orders in 5 days?

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Create Excitement Through LEAN Showcases


LEAN Showcases prove that cycle time reduction in GEs core customer-facing processes drives growth Criteria For Selecting Initial Lean Showcases: Passionate Business Leader Growth Impact Greater Than $50MM Revenue Must address at least 2 of 3 customer facing processes (New Product Introduction, Inquiry to Order, Order to Remittance)
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Lean WorkOuts Are The Perfect Tool For Driving Significant Cycle Time Reduction
WEEK ONE

LEAN WorkOut Approach

Draw Wing-to-wing value stream maps for innovating (NPI), selling (ITO), and/or fulfilling (OTR) including all relevant multi-functional participants to define future vision for the organization
WEEK TWO

Action teams implement as much as possible during the Lean WorkOut to reduce cycle times

Retail Sales Finance


First transaction 63 to 1 day capability 15% additional growth in 2006

Magnetic Resonance
Quoting from 62 days to same meeting NPI from 29 to 0 weeks

Locomotive
Assembly cycle from 29 to 10 days 40% increase in capacity

30+ Lean Showcases Across GE In Place Today


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Integrating LEAN With Six Sigma

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When To Use LEAN vs. Six Sigma


Time / Cultural Maturity
0 1 2 3 4 5 6

Tool Sophistication

LEAN Six Sigma

Co mp le
LEAN Six Sigma

xit y

&C on tro l

Sp e

ed

&W as

te

Eli

LEAN Six Sigma

mi na

tio

n
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Integrating LEAN With Six Sigma DMleanC


Define Measure Analyze Improve Control

Value Stream Mapping Current State

Value Stream Mapping Future State

Action Workout Implement Changes

USE LEAN METHODOLGY TO DRIVE IMPROVEMENTS WHERE CYCLE TIME IS IDENTIFIED AS ROOT CAUSE

Project Management Still Uses DMAIC With Lean as a Critical Tool For Improving Processes
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Broader Perspective Of Our Evolution


Lean Six Sigma wing-to-wing process focused Career focused Six Sigma Project focused Six Sigma Change acceleration process WorkOut 1989 1992 1996 1999 2005 Customer impact and growth Leadership Productivity X-Functional involvement Employee voice

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Employee Response To LEAN


91% would recommend participation in future Lean events to colleagues 91% are excited about using Lean to grow our business 95% agree that the improvements made are REAL and will improve the way we do business 93% feel that the improvements made will increase our responsiveness to customer needs and reduce our process cycle time
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Considerations For Implementing LEAN In Your Organization

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Thoughts On Implementing LEAN


Focus on the Customer
Target processes that most directly touch the customer and drive growth for your business.

Measure Customer Impact


Translate cycle time reductions to customer impact. Either through NPS or through incremental revenue and net income.

Get Everyone Engaged


Lean works best when you focus wing to wing and drive cross-functional participation.

Create a Continuous Learning Culture


Create new processes and dont be afraid to fail. Try new approaches and learn from your mistakes.
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Questions?