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Journey To World

Class
How LEAN
Implementations
Succeed

Bob Forshay, CPIM, CIRM, CSCP, CLM


Vice President
Transformance Advisors Inc.
CRO@apicsnoco.org

SAPICS 2008 – TITLE; PRESENTER Page 1


Who Am I?
• Transformance Advisors Inc
• CRO – APICS NoCo (Colorado, USA)
• APICS Certification Instructor
• Adjunct Faculty - FRCC
• Metal Fab & Electronics products
– Flow Meters & Custom Engineered prod
• High Tech OEM Program Mgmt
– SAN products
• Proj Mgmt, Mfg Plan, Mining, Retail

SAPICS 2008 – TITLE; PRESENTER Page 2


Today’s Objective
• Identify key aspects of a successful
world class LEAN initiative
• Understand elements of defining a
Value Stream and Business Case for
LEAN
• The opportunity to evaluate your
progress on the LEAN journey to
world class performance
SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 3
World Class - Two Perspectives

• “We Suck Less” from Feld’s blog, Boulder


Colorado, USA
OR

• Continued growth and profitability


over time with exceptional value for
stakeholders winning in a globally
competitive market

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 4
The World Class Imperative
75%
Market
Business Supply
Chain Leadershi
Profit Higher
Strategy Capabilities p
Advantage
Profits
*

Total Supply Chain Management Cost Best


15.0 Avg
13.1
12.2
11.3 11.5
10.9
10.3
10.0
% Revenue

7.1 6.7 7.0


6.1 6.5
5.8
5.0

0.0
C omputers Industrial Telecom C hemicals Packaged Overall
Goods
*Supply Chain Management Review, Survey of 110 companies in five sectors

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 5
The Lean Journey
Lean
Current
Supply
Position 5 Principles of Lean Chain

Developing leadership skills through


Seek
education, application, and coaching Perfection

Leverage
Pull
Create
Identify Flow
Value
Specify Streams
Value Systematic elimination of WASTE!

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 6
Case Study
• Looking back on 30+ years of learning
• Micro Motion Inc, Div. Emerson Electric
• APICS NoCo Chapter
• Transformance Advisors Inc.

©2003. Micro Motion, Inc. All rights reserved.

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 7
SS Fab & Electronic Processors

©2003. Micro Motion, Inc. All rights reserved.

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 8
Case Study
Before Now

• 55% On Time Del • 98% On Time Del


• 6-16 Wks Lead time • 4 Hrs Lead Time
• >20% Rework/Scrap • <1% Rework/Scrap
• Growth constrained • Unbound WW Growth
• 1.1 Inventory Turns • XX+ Inventory Turns
• No Competition • 14 Competitors
• Exceptional Quality • Exceptional Quality
• Slow Serv Response • Quick Serv Response
• $.25M – 1977 • $500M – 2008
• Expediting Skill • Employee Involvement

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 9
30 Yr Growth History
Sales

500.00
2008 Projecting $500M
400.00
$Million

300.00

200.00
1987 $39 M
100.00 1977 $.25M

0.00
1977 1979 1981 1984 1994 2000 2008
Year

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 10
Leadership Comes First
• Jim Collins, ‘Good To Great’ author;
– ‘You need executives, on the one hand,
who will argue and debate, sometimes
violently – in pursuit of the best answers,

– yet on the other hand, who unify fully


behind a decision, regardless of parochial
interests.’

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 11
Silos = Not Well Integrated,
Lack Cross Functional Leadership
Competing departmental
goals
Chaos
reigns
Unhappy
customers

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 12
Defining Value – Best Practices

Accounting
Add Cost = Value
Manufacturing & Supply
Chain Management
Remove Cost = Value

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 13
Our View of Value

Value Added: Activities necessary for meeting


customer requirements.

Business Value Added: Activities not involved


with meeting customer requirements, but are
necessary.

Non Value Added: Activities not necessary for


meeting customer requirements.

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 14
Three Approaches
VA BVA NVA
Current State

VA BVA NVA
Typical First Action - Hammer on Direct Labor

VA BVA NVA
LEAN = Eliminate Waste in Non-value Added Activities

Total Cost

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 15
Seven Steps To Success
1. Select the value stream
2. Document the current state
3. Map the current state
4. Identify and prioritize changes
5. Craft the future state
6. Time phased implementation
7. Continuous process improvement

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 16
1. Select the value stream
Value Stream:

Prepared By: Value Stream


Date: Definition Form
A. Select a value Value Stream Start:

Value Stream End:

stream Scope:

Owner/Manager:

B. Assemble team Participants:

C. Value stream Customers:

definition
Outputs:

Suppliers:

D.Define value as Inputs:

best you can Value*:

*Defined by the customer.

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 17
2. Document the current state
Conduct an upstream walk of the value stream.
Observe and document:
 Cycle times (people, equipment, and software)
 Changeover times
 Resource availability
 Available time
 Inventory queues
 Batch sizes
 Number of operators
 Package or container sizes
 Scrap rates
 Variations

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 18
3. Map the current state

Planning Scheduling Supervisor Customer


Service

Process: Process: Process: Process:


Operators: Operators: Operators: Operators:
Output: Output: Output: Output:
Value Added Time: Value Added Time: Value Added Time: Value Added Time:
Cycle Time: Cycle Time: Cycle Time: Cycle Time:
Value Added Ratio: Value Added Ratio: Value Added Ratio: Value Added Ratio:
Changeover Time: Changeover Time: Changeover Time: Changeover Time:
Inventory Comments: Inventory Comments: Inventory Comments: Inventory Comments: Inventory

XXX units
per week

Time
SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 19
Capture the Right Information
the details that happen between inventory

Process:
Operators:
Inputs Outputs
Output:
Value Added Time:
Cycle Time:
Value Added Ratio:
Changeover Time:
Priorities:
Inventory Comments: Inventory

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 20
Step 3 Using Flow Charting

Information

Materials/Products/Services

Funds

Product/Materials Returns

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 21
4. Identify and prioritize changes
 Take the quick fixes ASAP!
 Dream about perfection
 Education on the appropriate best practices
 Gain an understanding of technology enablers
 Determine the organization’s ability to change

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 22
5. Craft Future State

What would
‘Ideal’ look
like?

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 23
6. Implementation

Time phased
Implementation plan

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 24
7. Seek Perfection

Continuous
Process
Improvemen
t

Over and Over again


SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 25
Business Case Outline
the business case provides key decision makers with a compelling
reason and supporting data to make an informed decision

A. Current Situation E. Benefits/Objectives


B. Trends/Best Practices F. Cost/Resources
C. Statement of Need G. Justification
D. Scope H. Success Factors

+ Executive Summary of the above with an


emphasis on the benefits and costs.

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 26
Strategic Alignment

Predictable
Performance Strategic
Objectives

Supply Chain
Initiatives

Implementation Tactics

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 29
Most Important Key

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 30
Lean Management System
• Leader Standard Work (focus)
– Effectively links vision with execution
• Daily Accountability Processes
– Dashboard of accomplishment
• Visual Controls
– Tracking actual vs. plan, ties to daily plan
• Discipline & Diligence
– To execute as designed and intended

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 31
Behavior Drivers
Non-Lean Lean
• Self paced • Process paced
• “leave me alone” • “work as part of
• Do whatever it takes, team”
“I know who I can • Defined process for
depend on in a most everything,
pinch” “we follow process”
• Improvement is • Improvement is job
someone else’s job, of everyone, take
not my responsibility personal initiative
• Managed by pay or • Managed by perform
bonus system to expectations

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 32
Obstacles to Overcome
• Jim Womack, LEI, Lean Enterprise
Institute – Top Obstacle =
• Middle Management is obstruction
– Lack of leadership focus driving change
– Not motivated properly – fear of change
– Compensation not tied to proper metrics
– Lack of charter to become change agent
– Reluctance to empower people
– Culture, Ego, organizational inertia

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 33
Failure Symptoms
• Lack of visible progress early on
• Too long for team to embrace change
• Lack of visible cheerleader – leader
• Too many ‘Concrete Heads’ left in place
• Not dealing with obstacles early
• Deliberate stonewalling
• Trying to change too much too quickly

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 34
Plant GM as Change Agent
• Personal interaction daily with factory
• Communication on firm’s performance
• No complacency allowed
• Time allowed to learn, experiment
• Training for management and labor
• CPI as way of life – ‘from now on’

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 35
Training - Case Study
$10000/emp

•All New Hires – Focused skills


Lean
•More non-Manufacturing roles
•Integrating WW Operations Ninja
and Supply Chain elements
•2004 = Director Global Lean BIP
Enterprise hired
•12 World Wide Lean Business CIP
Process Managers, 1 FT
Problem Solving

$1000/emp

1988 2008

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 36
Learning to Change
• Group/Team Training
– All employees
• Culture - from Dictate
to Delegate/Coach
From:
To:

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 37
Learning To Change

Biz Imp Proc

Design of Experiment

Cont Imp Proc & Statistical Proc


Control

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 38
LEAN Success
• Decisions enabled at lower levels
• Involved employees
• Communication and more
– Company WINs & performance
• Breakdown silos
• Continuous pursuit of perfection
– Never satisfied
– Way of life every day, all employees

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 39
Motivation – Case Study
• Business Improvement Program
• 1st year
– 244 ideas submitted, 123 evaluated
– 37 implemented for $798,000 savings
– $2325 Cash awards first cycle
• 2007
– ~150 ideas implemented annually
– Annual CIP Fair – Celebration of
ideas/gains

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 40
Examples of Gains
• Standard work procedures documented
• SPC charting established process control
• Inventory record accuracy doubled – on-
going
• BOM inaccuracy issues eliminated
• Dramatically improved 1st Pass Yield
• Through-put increased by over 50%
• Average OTD = >80% improved within 1st
year
• Internal schedule performance dramatically
improved
SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 41
Uncover and Eliminate Waste

Kaizen Blitz teams require


skills that most companies
(and schools) don’t normally
teach employees.

Working Problem
Together Solving Tools

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 42
7 Types of Waste
Includes
management-decision making
Poor Processing
Defects Over
Production
7 types
of waste
Waiting Inventory

Movement Motion

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 43
Root Cause Analysis
5
Whys? Occurrence

Attribute

Data Drives Change – Remove Emotion


SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 44
Reducing Variability
Plan Do Check Act

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 45
Histogram – Sample Grades

How Many
Patterns?

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 46
Control Charts

UCL
Process Measurement

LCL

Time

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 47
Inaccuracy is Cumulative
Master Bill of
Forecast Inventory Resources
Schedule Materials

80% 95% 85% 95% 90%

.80 X .95 X .85 X .95 X .90 = 55%

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 48
Evaluate – Assessment
1. Standard Work defined
2. Visual Controls
3. Daily Accountability
4. Process Definition
5. Disciplined Adherence to process
6. Root Cause Problem Solving
7. Process Improvement On-Going

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 49
Assessment
1. Pre-Implementation
 Structured plan, funded and resourced
2. Beginning Implementation
 Awareness, Education Plan in play
3. Recognizable Gains
 Daily accountability
4. Systems Stabilizing
5. Sustainable System
 Improvement becomes routine

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 50
Summary Review
• Identify key aspects of a successful
LEAN initiative – Lean Leadership
Management
• Understand elements of defining a
Value Stream and Business Case for
LEAN
• Evaluate your progress and
commitment to the LEAN journey to
world class performance

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 51
Appendix
• Sample Business Case
• Sample Assessment

• Available on www.apicsnoco.org -
see links to CLM (Certified Lean
Master) project examples

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 52
Bibliography
• Certified Lean Master program - ISCEA
– APICS NoCo www.apicsnoco.org
– Transformance Advisors Inc, Mike Loughrin, Bob
Forshay, Mark Lindberg, Mike Sheahan
www.transformanceadvisors.com
• ‘Creating A Lean Culture – Tools to Sustain
Lean Conversions’ by David Mann
• Lean Transformation by Bruce A. Henderson &
Jorge L. Larco

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 53
End of Presentation
Beginning of the LEAN Journey

SAPICS 2008 – How LEAN Implementations Succeed; Bob Forshay, Transformance Advisors Inc. Page 54
Bob Forshay, CPIM, CIRM, CSCP, CLM
Vice President

Transformance Advisors Inc.


bforshay@emailta.com & CRO@apicsnoco.org

720-244-0579
Skype: bobf4553 (Bob Forshay)

SAPICS 2008 – TITLE; PRESENTER Page 61