GE Capital - Lean

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
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1/ GE Proprietary Information
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
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
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
Evolution Of LEAN Six Sigma At GE
1995
GE Launches Six Sigma Throughout Company
Focus : Core Activities Objective : Productivity & Asset Utilization
Evolution
PRODUCTIVITY
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
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
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
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
Enabling Growth
Customer Focus
PRODUCTIVITY
Customer Focus
PRODUCT DESIGN
CUSTOMER FOCUS
THE WAY WE WORK
ENABLE GROWTH
10 / GE Proprietary Information
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
LEAN Principles
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.
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
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
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
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
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
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
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
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
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

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

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%

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
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
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
The Seven Types Of Waste

Over Processing Waiting Motion
Waiting Transportation
Inventory Moving Things Overproduction Defects/Inspection
Overproduction Inventory
Value Stream Mapping
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)
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
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
370 Mins 32 / GE Proprietary Information
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
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
Defining Action Workout Teams

current state
Kaizen Team #1
Kaizen Team #2
Kaizen Team #3
Kaizen Team #4
future state
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
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
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
36 / G E ACF C - Lea n / 8/25/2006
VSM Helps Identify Current State and Prioritize an Improvement Plan TPS are Tools for Improvement
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
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%
Spaghetti Chart
Previous Flow Chart New Flow Chart
4 8 4 3 1 7
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
Before
After
5S Improvement
Planning
Tools
Material
Cart
Summary Flow Improvement

Old Process 2 Hours
Tools Spaghetti Chart, 5S
Results 12 minutes
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%
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
Set Up Reduction Example

Establish Visual Controls
After
Before
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
Summary Setup Improvement

Old Process 4 Hours
Tools 5S, Internal to External
Results 27 minutes
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
Six Sigma Tools

Before Process Capability After Process Capability
Find Top Problems Pareto Standardize the Process

Summary Setup Improvement

Old Process 10% Rework
Tools Six Sigma Analysis
Results 0.7% Rework
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
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
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
Launching LEAN at GE
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??

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)
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?
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)
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

Integrating LEAN With Six Sigma
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
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
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
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
Considerations For Implementing LEAN In Your Organization
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.
Questions?

GE Capital - Lean

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GE

LEAN Workshop Agenda

GEs change culture: A Continuing Journey

Lean Six Sigma

Strategy & Growth:

Change Acceleration Process (CAP):

Productivity / Best Practices:

Work-Out / Town Meetings:

Lean Six Sigma

Evolution Of LEAN Six Sigma At GE

Evolution Of LEAN Six Sigma At GE

Evolution Of LEAN Six Sigma At GE

Evolution Of LEAN Six Sigma At GE

Evolution Of LEAN Six Sigma At GE

THE WAY WE WORK

Net Promoter Score (NPS)

9 - 10 Promoters 7-8 Passively Satisfied

Batch vs. Flow Simulation

Understanding & Eliminating Waste

Driving improved customer satisfaction

Cycle time or lead time

Lean attacks waste here

Work: Value added time

Wait time/waste: Non-value added time

Change the culture

Grow the business

Toyota Production System

TPS House - Heijunka

There are three main elements of Heijunka

TPS House - Jidoka

There are two main elements of Jidoka

TPS House - JIT

There are three main elements of JIT

Lean Thinking Principles

1 Specify Value 5 Work to Perfection

2 Map the Value Stream

product or service to the customer

Non-Value Added Activity

Value Added Activity

Typical Process: 5-10% Activities Value-Adding

2. Identify the Value Stream

Most Value Streams have less than 5% Value Add Time

2. Identify the Value Stream

A 2 hours process is taking us 63 days!

Goal: Reduce 63 day lead time to 27 days!

Typical Cycle Time Improvements > 50%

5 Orders 3 Process Steps 1 Hour per order/operation

The Seven Types Of Waste

Inventory Moving Things Overproduction Defects/Inspection

Value Stream Mapping

What Is A Value Stream?

TOTAL VALUE STREAM

Value streams cut across functional boundaries

Value Stream Maps vs. Process Maps

Traditional Process Maps

Creating a Current State Value Stream Map

Customer calls and provides credit application information

Submit credit info to Credit Department

Customer receives credit decision W ~240 Min notification

inventory has the opportunity to accumulate

Train sales to enter deals

370 Mins 32 / GE Proprietary Information

Future State VSM Mapping

Creating The Future State