Learning from Toyota

:
Creating a Culture of Continuous Improvement

Jeffrey K. Liker
Professor, Industrial and Operations Engineering The University of Michigan

TBM Lean Leaders Conference
April 26, 2008

Lean is about obtaining brilliant results from brilliant processes
By focusing on (Jim Womack & Dan Jones):
Value Value streams Flow Pull Perfection

By eliminating waste from all processes

© Copyright Jeffrey Liker

Sounds good, so let s do lean !

how

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Let s Implement the Lean System
Let s create a Lean Office to implement a system

We need to adapt TPS to our business And have a roadmap to implement
Model lines

Wall to wall stability

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Problem with Implementing the system
We get systematic change Impressive model lines and wall to wall stability

But

BUT: Still disappointing budget results Hard to spread beyond model line Lots of conflict between the Lean Excellence Office and line management Hard to sustain

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Answer: Build a Culture of Continuous Improvement
For ongoing success Integral role of shared culture

A culture of quality people working together with shared (Toyota) values to continuously improve.

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Culture is an integral part of the system: It is not just brilliant processes, but exceptional people in a supportive culture Culture

Customer Inputs
Process Quality Stability

Q,C,D

Product Value Stream

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People are the Heart and Soul of the Toyota Way
The Toyota DNA =

PRODUCT VALUE STREAM PEOPLE VALUE STREAM

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Is shared culture necessary for Lean?
No 1. Initial low hanging fruit stage 2. If a lot of supervision will be available 3. If just better Q,C,D are good enough Yes 1. If you need highest Q,C,D as standard 2. If you want voluntary help - when Andon goes red! 3. If you want continuous improvement 4. There will never be enough managers for total quality!

© Copyright Jeffrey Liker

What is Culture?
What we see Artifacts
Physical results, materials, operating concepts.

Norms and Behaviors
Ways of acting considered normal, authorized, habitual or taboo.

Beliefs, Assumptions, Thinking What drives us
Explicit beliefs, implicit cultural assumptions, and paradigms of thought

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What is Shared Culture?
Conflicting or Disengaged Culture Shared Values and Direction Values
Supervisor

Supervisor

Direction

Joe Jane Bill Bill Forces of Entropy cause Culture Decay
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Joe

Jane

Toyota s Culture

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Toyota s Cultural Roots
Group identity as rice farmers in Japan Samurai Tradition - Honor and the leader protects Zen - from empty Mind comes new insight Confucius - Honor the community, rules Deming - Most problems are management issues, apply quality tools Toyoda Family - strive to contribute (looms) Henry Ford - Pragmatism, fair to working class, integrated flow

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What are inspirational values to Eastern Culture?

The Great Wave Off Kanagawa
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What are inspirational values to Western Culture?

Marlboro Man
Rugged, self reliant, individualist winners !
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West Vs. East
World Change Interdependence Role of Individual Life and Work
Rational, Logical: Humanity exploits Project plans and financial controls
Rugged, self reliant, individualist winners Partially Concealed, Both Awesome and Threatening: Human adapts

Standards, experiment, adjustment Community partners needed to survive Individual enmeshed in group, mutual obligations Fluid, process view, Together we can adapt and learn to succeed

Individual primary, strong ego, winners and losers Concrete, Material view, Can do results oriented
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Two Culture Coaching Processes On-Job Development Coaching 1. What is the standard? what should be happening? 2. What is happening now? (Go to Gemba if needed) 3. What is the biggest problem? Agree on urgency? 4. What is the next step? What action is needed? 5. Gain commitment 6. Check on progress and adjust Mentoring Values 1. Clarify the event or values in question 2. Reflect on the Thought Cycle and Experience 3. Raise the level of self-awareness thru dialogue 4. Discuss alternative Thinking or Values 5. Ask individual to self reflect (Hansei)
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What to Coach? Toyota Business Process (TBP)
Concrete Actions Drive and Dedication (Principles)
Customers First Always Confirm the purpose of your work Ownership and responsibility Visualization (Mieruka) Judgment based on facts Think and act persistently Follow each process with sincerity and commitment Thorough communication Involve all stakeholders

P D C A

Clarify the problem Break down the problem Target setting Root cause analysis Develop Countermeasures See countermeasures through

Monitor both results and processes

Standardize successful processes

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The Quality People Value Stream to Build a Lean Culture
Building Culture and People the Toyota Way:
The Human System for Lean Management

Organizational Supporting Processes
Human Resource Management
Commitment and Tools for Stable Employment Powerful HR Supports Fair and Consistent Policies and Practices
Slow Promotion & Rewards for Teamwork

Hoshin Kanri
Policy Deployment

INPUTS
Toyota Philosophy & Values, Toyota Production System Principles, Pool of Eligible Human Resources

OUTPUTS
Attract
Quality People Value Stream -Recruitment -Selection -Initial Orientation

Develop
-Roles -Training/ Coaching -OJD

Engage
--Follow standards --Improve standards --Problem Solving ID with Team

Enroll
--Career Development -Community/ Family -Environment --ID with Company

Practice
Plan Do

Act

Check

Trainable
Work Groups & Team Problem Solving

Able

Performing
Two-Way Communication via Visual Mgmt

Committed
Servant Leadership

Exceptional teams working to continuously improve based on shared Toyota Values

PURPOSE Long-Term Mutual Prosperity by producing high quality, low cost, and on-time products

Clean (5S) and Safe Workplace

People Supporting Processes
Daily Management

Respect for People & Continuous Improvement via Plan-Do-Check-Act

© Copyright Jeffrey Liker

Quality People Value Stream

Inputs Select
Inputs
1. 2. 3. 4. Purpose Philosophy TPS Principle Eligible People 1. 2. 3. 4.

learn it

do it

commit

Practice
be it

Develop
Able
Clear Roles Training Coaching OJT 1. 2. 3.

Engage
Perform
Standards Problem Solve Identify with Team

Inspire
Committed
1. Values 2. Community 3. Environment 4. Company

PDCA

Engaging People with the Real Place

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Purpose is Central to Philosophy
Internal
Learning Community

External
Improving Partners

People Toyota s Purpose

Business
Lean Systems Contributor to Society

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Toyota s Purpose

Survive as an organization by improving and evolving how we make good products for customers.

© Copyright Jeffrey Liker

Quality People Value Stream

Inputs Select
Inputs
1. 2. 3. 4. Purpose Philosophy TPS Principle Eligible People 1. 2. 3. 4.

learn it

do it

commit

Practice
be it

Develop
Able
Clear Roles Training Coaching OJT 1. 2. 3.

Engage
Perform
Standards Problem Solve Identify with Team

Inspire
Committed
1. Values 2. Community 3. Environment 4. Company

PDCA

Engaging People with the Real Place

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Characteristics Toyota Selects For
Team Orientation Initiative Communication Skills Problem Identification Skills Problem Solution Skills Practical Learning Skills Adaptability Specific Technical Competencies Needed

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Phase 1 Advertizing & Recruitment 142,000 Applicants Phase 2 Orientation, Application & Testing 28,000 Passed Phase 3 Assessment Center 12,000 Passed Phase 4 Final Screening 8000 Passed

Original Recruitment to Selection Process for Georgetown, Kentucky

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Phase 5 Assess Health & References 6000 Job Offers Phase 6 Probation

Quality People Value Stream

Inputs Select
Inputs
1. 2. 3. 4. Purpose Philosophy TPS Principle Eligible People 1. 2. 3. 4.

learn it

do it

commit

Practice
be it

Develop
Able
Clear Roles Training Coaching OJT 1. 2. 3.

Engage
Perform
Standards Problem Solve Identify with Team

Inspire
Committed
1. Values 2. Community 3. Environment 4. Company

PDCA

Engaging People with the Real Place

© Copyright Jeffrey Liker

Highly Organized Training
TMMK NEW HIRE TRAINING SCHEDULE
ASSEMBLY NEW HIRE TRAINS WITH PROFESSIONAL TEAM MEMBER TIME 1st / 2nd NO O.T. NO O.T. NO O.T.

MONDAY

WEDNESDAY

FRIDAY

5:15 - 7:15p

CQPO
Intro to Quality Circles BREAK JIT primary process

CQPO
Review/Testing Modules 1-4 BREAK OJT 25% primary
WITH PROFESSIONAL TEAM MEMBER

7:15 - 7:30p 7:30 - 9:45p 9:45 - 10:30p 10:30p - 12:30a 12:30 - 12:45a 12:45 - 1:05a 1:05 - 2:00a

GPC TRAINING IN ASSEMBLY

BY PRODUCTION T/L

OJT 25% primary LUNCH JIT secondary process
BY PRODUCTION T/L

LUNCH OJT 25% secondary
WITH PROFESSIONAL TEAM MEMBER

OJT 25% secondary BREAK Travel to Fitness Facility Core / Cardio Circuit

BREAK Travel to Fitness Facility Work Conditioning Circuit
ND

EACH NE W HIRE IS TO FILL OUT THIS FORM DAILY DURING 2 BREAK (5 MINUTES OF COMPANY TIME) AND LEAVE IT WITH THEIR G/L. EACH NEW HIRE IS TO RETURN THIS TRAINING SCHEDULE TO HFC STAFF BY F RIDAY. Did you train with a professional team member? Was the training schedule followed? Are you experiencing any discomfort performing processes? If yes, did you report it to your TL or GL? Is additional training needed?

Y Y Y

/ / /

N N N

Y

/

N

NEW HIRE COMMENT SECTION DAILY NH SIGNATURE

© Copyright Jeffrey Liker (Source: Precision Staffing Document, TMMKÕ Temporary Contractor) s

GROUP LEADER / TEAM LEADER COMMENT SECTION

Human Resources Development Modes

OJD TJIÓ Motivation & Practical Application

Classroom Training

Personal Training Opportunities

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Step-by-Step Progression to Stable Job Performance
ID Fundamental Skills for a Class of jobs
Train in Fundamental Skills off of Line (GPC) Job Breakdown to Work Elements for Specific Job Use Toyota Job Instruction (TJI) to Train Associate

Continuously Improve Job & Job Instruction

Off-Line Skills Training

On-JobDevelopment

Follow-up & Support until Masters Job

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Global Production Center Station to Teach about Center of Gravity
Center of Gravity

These two missing cancel each other out

Center of Gravity moves up 1/9 away from the open space toward the weight

These two missing cancel each other out Center of Gravity moves 1/9 of the way up toward the weight
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GPC Greatly Improves Instructional Efficiency

Benefits: Instruction efficiency 6-10 times greater
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How Do we Develop People? Research in occupational training shows that individuals retain about: 10 % of what they read 10 % of what they read 20 % of what they hear 20 % of what they hear 30% of what they see 30% of what they see 50% of what they hear and use 50% of what they hear and use 70% of what they say 70% of what they say 90% of what they say and do 90% of what they say and do
© Copyright Jeffrey Liker

Job Instruction Training is designed to teach Job Instruction Training is designed to teach
people how to do aaparticular job by: people how to do particular job by:

Hearing (what to do) Hearing (what to do) Seeing (how it is done) Seeing (how it is done) Using (what was learned) Using (what was learned) Saying (what was learned) Saying (what was learned) Doing (the task) Doing (the task) REPEATEDLY !! REPEATEDLY !!

© Copyright Jeffrey Liker

The Toyota Job Instruction Training Method
The Four Steps of TJI
Step 4: FOLLOW UP
Action Plan
Major Steps

Step 1: PREPARE WORKER

Key Points

Check

Reasons

Do

Step 3: TRY OUT PERFORMANCE

Step 2: PRESENT OPERATION

NOTE: The JI method originated with the American Training Within Industry (TWI) program.

© Copyright Jeffrey Liker

Bumper Trimming Job Breakdown Sheet
JOB BREAKDOWN SHEET
DATE: AREA: Bumper molding 7/20/2006 Phil Turek Team Leader Todd Chambers Supervisor Phil Turek JOB: Rear bumper molding operator - Trimming WRITTEN BY:

MAJOR STEPS
Step # 1 Trim flash ball on left side

KEYPOINTS
SAFETY: Injury avoidance, ergonomics, danger points QUALITY: Defect avoidance, check points, standards TECHNIQUE: Efficient movement, special method COST: Proper use of materials 1. Hold flash straight up and tight 2. Trim away from body and arm 3. Blade flush with top surface

REASONS FOR KEYPOINTS
1. Makes trimming easier 2. Prevents injury- cuts 3. Visible surface, flash line 1mm max.

Step # 2

1. Start on trim line- 1 mm variation 2. Blade must be perpindicular 3. Follow trim line- 1mm variation 4. Curving motion while trimming

1. Visible surface- quality spec. 2. Angled cut not acceptable 3. Visible surface- quality spec. 4. Technique to make trimming easier 1. Prevents twisting of bumper during cut 2. Helps make cut horizontal and straight 3. Cut is easier 4. Stopping will cause a jagged cut

Trim left side core flash

Step # 3

1. Hold gate up horizontally 2. Rest blade on bumper edge horizontally 3. Angle knife handle back (blade is horizontal) 4. One continuous movement

Trim gate flash

Step # 4 Trim flash ball on right side

1. Hold flash straight up and tight 2. Trim away from body and arm 3. Blade flush with top surface

1. Makes trimming easier 2. Prevents injury- cuts 3. Visible surface, flash line 1mm max.

Step # 5 Trim right side core flash

1. Start on trim line- 1 mm variation 2. Blade must be perpindicular 3. Follow trim line- 1mm variation 4. Curving motion while trimming

1. Visible surface- quality spec. 2. Angled cut not acceptable 3. Visible surface- quality spec. 4. Technique to make trimming easier

L EAN ASSOCIATES, IN C.

www.leanassociates.com

Importance of Key Points
Key Points are what people really need to know in order to Key Points are what people really need to know in order to successfully complete the job task. successfully complete the job task. The single greatest determinant of aasuccessful training outcome The single greatest determinant of successful training outcome (employee can learn the job quickly and perform with no (employee can learn the job quickly and perform with no injuries and with minimal problems) is the ability to identify and injuries and with minimal problems) is the ability to identify and convey CRITICAL Key Point information convey CRITICAL Key Point information

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Auditing Standardized Work

How it works: Group leader checks one process/day --cards contain questions --notes discrepancies/countermeasures --move card to slot in next row --turn card dark side out if discrepancy Assistant Manager checks daily --randomly select card --obtain standard work sheet --go through audit with group leader **NUMMI has 90+ boards throughout plant

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Leaders at all Levels Support Value Added Process
General Manager and VP Level
Business Planning and Policy Deployment Tools: Hoshin Planning & Toyota Business Practices (TBP)

Manager Level Focus on Shop Floor and Systems Improvement. Tools: Visual Factory & TBP TBP Team Leader and Group Leader Manage Standardized Work, Process Improvement and Develop Problem Solving Skills. Tools: FMDS, TBP & OJD

Team Member Focus on Fundamental Skills & Standardized Work Tools: Skills Training, Job Instruction, Standardized Work and 5-S

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Multifunction Training Chart for Team Leader to Prepare for Future Group Leader Role
GL: (Group Leader Name) Name: Dept.: Date: Jeff Assy 1/2/12
Process or Skill

Team Leader Name Mike Mary Mark Margaret

Key 0% 50% 100%

1 2 3 4 5 6 7 8 9 10

Team 1 Processes Team 2 Processes Team 3 Processes Team 4 Processes Time/Attendance Safety Task Force Lead Quality Circle Cost Committee Scrap processing TPM on equipment

© Copyright Jeffrey Liker

Quality People Value Stream

Inputs Select
Inputs
1. 2. 3. 4. Purpose Philosophy TPS Principle Eligible People 1. 2. 3. 4.

learn it

do it

commit

Practice
be it

Develop
Able
Clear Roles Training Coaching OJT 1. 2. 3.

Engage
Perform
Standards Problem Solve Identify with Team

Inspire
Committed
1. Values 2. Community 3. Environment 4. Company

PDCA

Engaging People with the Real Place

© Copyright Jeffrey Liker

The Silver Bullet of Change

Inspires Problem Solving and Kaizen Engages

Develops

Practices

Joint Problem Solving and Kaizen are the driving force of a functioning daily lean culture!
© Copyright Jeffrey Liker

Daily Problem Solving Culture It is this constant coaching of the problem solving process that develops the culture and level of skill that Toyota has been able to achieve. Having the opportunity to practice and develop daily problem solving is the Toyota Culture. Every deviation is seen as a chance to problem solve.
Toyota Culture p. 186

© Copyright Jeffrey Liker

TPS and Toyota Way
JIT Standards

How?

Lean Processes Surface Problems Problems openly Identified Solve problems one by one
Improve management standards

© Copyright Jeffrey Liker

Mentor-Mentee Chain
Goals Targets, Metrics Dialogue Go and see Open Questions No Blame System Problems PDCA 5 Why? One Page A3 s Regular Checks against Plan Go and See Please Try All practice the same basic patterns of Just Do Now
© Copyright Jeffrey Liker

What Should Be? What Is Happening? Biggest Problem? What is Next Step?

Problem solving, dialogue, and mentoring values everyday

Quality People Value Stream

Inputs Select
Inputs
1. 2. 3. 4. Purpose Philosophy TPS Principle Eligible People 1. 2. 3. 4.

learn it

do it

commit

Practice
be it

Develop
Able
Clear Roles Training Coaching OJT 1. 2. 3.

Engage
Perform
Standards Problem Solve Identify with Team

Inspire
Committed
1. Values 2. Community 3. Environment 4. Company

PDCA

Engaging People with the Real Place

© Copyright Jeffrey Liker

Lean Leadership

© Copyright Jeffrey Liker

Upper Management Role

Jeffrey Liker, The Toyota Way

© Copyright Jeffrey Liker

Make people think:
By going to the workplace Observing operations with them Showing typical problems Outlining typical solutions

We were asked to stand in a circle for 1 week and come up with 240 improvements and Implement most of them. --Toyota Japan TPS Training
© Copyright Jeffrey Liker

Role of Management Question, Challenge, Do Not Give Answers!

To keep kaizen going Top management must go to the workplace Look at problems revealed day to day, hour by hour Give people problems to solve and follow up

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Role of lean coach
Use the lean tools to teach managers and their teams To visualize problems Experiment And solve them

Teamwork!

© Copyright Jeffrey Liker

To develop employees by problem solving

P C

D A

Plan - Do - Check - Act

© Copyright Jeffrey Liker

Traditional Western leadership compared to Toyota leadership
Traditional Western Leader Quick Results Proud Climb Ladder Rapidly Results at all Costs Accomplish objectives through People Overcome Barriers Toyota Leader Patient Humble Learn Deeply and Horizontally and gradually work way up ladder The Right Process will Lead to the Right Results Develop People Take Time to Deeply understand Problems and Root Cause before Acting Deeply understand the process

Manage by the Numbers

© Copyright Jeffrey Liker

HR Supports the People Value Stream
Building Culture and People the Toyota Way:
The Human System for Lean Management

HR Supports a Safe, Secure, and Fair Environment

Organizational Supporting Processes
Human Resource Management
Commitment and Tools for Stable Employment Powerful HR Supports Fair and Consistent Policies and Practices
Slow Promotion & Rewards for Teamwork

Hoshin Kanri
Policy Deployment

INPUTS
Toyota Philosophy & Values, Toyota Production System Principles, Pool of Eligible Human Resources

OUTPUTS
Attract
Quality People Value Stream -Recruitment -Selection -Initial Orientation

Develop
-Roles -Training/ Coaching -OJD

Engage
--Follow standards --Improve standards --Problem Solving ID with Team

Enroll
--Career Development -Community/ Family -Environment --ID with Company

Practice
Plan Do

Act

Check

Trainable
Work Groups & Team Problem Solving

Able

Performing
Two-Way Communication via Visual Mgmt

Committed
Servant Leadership

Exceptional teams working to continuously improve based on shared Toyota Values

PURPOSE Long-Term Mutual Prosperity by producing high quality, low cost, and on-time products

Clean (5S) and Safe Workplace

People Supporting Processes
Daily Management

Respect for People & Continuous Improvement via Plan-Do-Check-Act

© Copyright Jeffrey Liker

Mutual Trust Connects the Product and People Value Streams
TOYOTA CULTURE
PRODUCT VALUE STREAM

Culture

PRO BLEMS IDENTIFIED

PRO BLEMS S OLVED

MUTUAL TRUST

PEOPLE VALUE STREAM

JUST-IN-TIME

Lean Structure and Systems

STABILIZATION VISUALIZATION STANDARDIZATION

© Copyright Jeffrey Liker

Stable Workforce Planning is the Foundation of Mutual Trust: Key Methods
Flexible Staffing: Flexible workforce (broad job classifications, cross-training, job rotation) Part-time workforce and freshman jobs Flexible daily overtime (2 shift system) Planned production Saturdays Flexible Factories: Multiple cars on same line Multiple factories make products (e.g., Japan and US) Leveled schedule Zero changeover time (e.g., paint, body shop)

© Copyright Jeffrey Liker

Two Shift Production with Overtime Capability Provide Flexible Production
Shift First Second Third Shift Maintenance Production Time 6:30 A.M. 3:15 P.M. (with 45 minutes unpaid lunch) 5:15P.M. 2:00 A.M. None utilized for Preventative Maintenance Overtime Capability 3:15 P.M. 5:15 P.M. 2:00 A.M. 4:00 A.M. None for Production 4:00 A.M. 6:30 A.M.

© Copyright Jeffrey Liker

Example NEED/HAVE monthly report
Needed # of Employees Actual # of Employees Forecasted long term absences Forecasted attrition/transfer promotions Need/Have Gap Body 299 304 5 2 Paint 199 208 6 1 Assembly 398 410 10 3 Quality 100 100 2 1 Total 996 1022 23 7

-2

+2

-1

-3

-4

© Copyright Jeffrey Liker

Hoshin Goal-Setting Directs Continuous Improvement from Top to Bottom
Hoshin System Hoshin Breakdown

Background

Division

Division Hoshin (Direction/activity & Targets)

Section

Section Hoshin (Direction/activity & Targets)

Assessment of individual performance, bonus

Team/ Group

Individual

Understanding, interpretation, freedom of how to support, ownership, motivation

Implementation Plan (Direction /activity & Targets) Individual Priority (Activities & Targets)

© Copyright Jeffrey Liker

Connecting Hoshin and Floor Management Development System
1. What do we need to do? (Company Department Group)

Hoshin Objectives KPI s

2. How should we do it? (Process)

FMDS Daily Activities

3. How are we doing? (Results)
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Main KPI Sub-KPI Process KPI

Team Board for Floor Management Development System

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Reward System base on Long-Term Trust Economy

Commodity Economy One for one exchanges Low risk Easy to rectify bad exchange Relationship must be renewed after each exchange Terms available to all Each side maximizes its advantage at the expense of the other side Goal is individual advantage Currency is money

Trust Economy Fair exchange works it self out over time High risk Betrayals hard to repair Open-ended relationship Terms highly personalized Both sides give up something for the common goal Goal is mutual growth Currency is trust

© Copyright Jeffrey Liker

Three Compensation Components and their Respective Percentages of Total Pay for Georgetown Hourly Team Associates in Typical Year

Base

Bonus 12% 5%

Performance Award

83%

Bonus= Company performance Performance= Plant performance (based on key performance indicators) **Managers also have an individual development plan for individual bonus

© Copyright Jeffrey Liker

Can culture be re-trained?
What is the track record of the following? Executive or cross-functional teambuilding? Diversity training? Corporate mergers? Transfer of culture and practices off-shore?

© Copyright Jeffrey Liker

Realizing New Values
Hansei

Result Behavior

Feeling

Values
© Copyright Jeffrey Liker

Mentoring Process
1. Clarify the event or values in question 2. Reflect on the Thought Cycle with the individual 3. Raise the level of self-awareness thru dialogue 4. Discuss alternative approaches and values 5. Ask individual to self reflect (Hansei)

© Copyright Jeffrey Liker

Key Points for Implementing Lean System

Process improvement and people development must go hand in hand You must be patient for people development
Keep your eyes open to the growth and strengthening of people (culture change) Push when procrastination is preventing the growth of people (avoiding action) Provide necessary challenges and support for people development!

© Copyright Jeffrey Liker

The lean journey starts with oneself
How can I learn to identify waste? How can I become a teacher of waste elimination?

You must become the change you want to see.
Gandhi

© Copyright Jeffrey Liker

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