2A – IMPLEMENTING YOUR LEAN TURNAROUND

Art Byrne
 DELIVER MORE VALUE TO YOUR
CUSTOMERS THAN YOUR COMPETITION
CAN
IMPROVE YOUR OWN VALUE
ADDING
Compete On Your Operational
Excellence
LEAN IS A TIME BASED
GROWTH STRATEGY
WE THINK ABOUT THIS ALL WRONG
Lean Is A Strategic Approach To How You Run Your
Business

It Is Not Jus A Bunch Of Tools

Saying “We Have Black Belts And Green Belts, So We

Are Lean” Is Ridiculous

It Is Not Just Some Training Exercise

 WHY LEAN?
You Are Running A Business

Maximize Results For All Stakeholders

Your People
Your Customers
Your Shareholders

LEAN IS THE GREATEST STRATEGIC WEAPON YOU

WILL EVER SEE
WIREMOLD RESULTS

Lead Times From 4-6 Wks. To 1-2 Days

Productivity Up 162%
Gross Profit up From 38% To 51%
Inventory Turns From 3x To 18x
Sales More Than Quadrupled
Operating Income Up 13.4 Times
Enterprise Value Up 2,467%
VIRGINIA MASON RESULTS
Nurses Spend 90% Of Time With Patients Vs. 35%
Reporting Lab Results Down 85%
Supply Costs Down $1 Mil. A Year
Surgery Center; Cases Per Day Up 60%
Margin $’s; $0.7 M in 2000 To $41 M In 2010
 ASR RESULTS
Result %Change

Inventory Turns 2.5x To 6.2x +148%

Wk. Capital %/Sales 34% To 15% -50%

Customer Service 85% To 98% +15%

EBITDA Margin 17% To 23% +35%

Cash Freed From W/C $65M n.a.

 COMPANY E RESULTS
EBITDA Results 2005 To 2013 +460%

Reduced Working Capital By $221 Million

Lowered Headcount By 45%

Freed Up 2.8 Million Sq. Feet Of Space

Gained 9 Points Of Gross Margin In Europe Alone

 LEAN VS. TRADITIONAL APPROACH
Lean Thinking Is The Opposite Of The Traditional Approach

Hard To Accept That Everything You Have Been

Taught/Learned Is Wrong

Even Harder For Your Management Team And Associates To

Accept And Change
LEAN VS. TRADITIONAL
Understand Value Added Vs. Non-Value Added

Focus On Processes Not Results

Move From Batch To Flow

Switch To Pull From Push

Eliminate Inventory Vs. Rely On Inventory

EVERYTHING HAS TO CHANGE
 YOU CAN’T DROP LEAN ON A BATCH
ORGANIZATIONAL STRUCTURE
• This Is The Most Common Error

• The Whole Company; Sales, Marketing, Finance, IT, HR, Must

Make The Shift

• To Change The People Change The Structure

START WITH THE
FUNDAMENTALS
MANAGEMENT MUSTS
LEAN IS THE STRATEGY

LEAD FROM THE TOP

TRANSFORM THE PEOPLE

LEADERSHIP IS THE KEY

ESTABLISH THE LEAN FUNDAMENTALS
Work To TAKT Time

One Piece Flow

Standard Work

Pull System
 NEXT STEPS
GET THE KNOWLEDGE

ARTICULATE THE VISION

DETERMINE THE MANAGEMENT APPROACH

 RUN THE COMPANY ON YOUR
OPERATIONAL EXCELLENCE GOALS
• 100% On Time Customer Service
• 50% Reduction In Defects Per Year
• 20% Productivity Gain Each Year
• 20X Inventory Turns
• Visual Control And The 5S’s

LOOK FORWARD NOT BACKWARD

 START HOSHIN KANRI
• Aligns Your Team Around Clear Objectives

• Must Do Can’t Fail Projects

• Makes Available Resources Very Clear

• De-Select What Can’t Get Done

 REORGANIZE BY VALUE STREAM
• Team Leaders

• Buyer/Planner

• Value Stream Engineers

• Cell Leaders

• Support Functions
 VALUE STREAM LEADERS
• Self Motivated Problem Solvers
• Capable Of Running A Small/Medium Size Business
• Report to Both VP Of OPS and Senior Team
• Focus On Key Value Adding Measurements
• Complimented With A Strong KPO
 GETTING STARTED
CEO SHOULD PRESENT THE STRATEGY
What?
Why?
How?
Expected Results

CEO SHOULD DO INITIAL TRAINING

CEO SHOULD SELECT INITIAL KAIZENS AND SET STRETCH GOALS

 REMOVE THE WASTE

UNDERSTAND VALUE ADDING VS. NON- VALUE ADDING

BECOME A CONTINUOUS IMPROVEMENT [KAIZEN] COMPANY

INVENTORY IS THE ROOT OF
ALL EVIL
MAIN THRUST IS TO GO FROM
BATCH TO FLOW
FIRST CREATE FLOW THEN PULL
• Set Up Reduction Comes First

• Create One Piece Flow Cells

• Establish Standard Work

• Create Visual Controls

• Implement Pull
 5S AND SMED ARE
FOUNDATIONAL ACTIVITIES
Set Up Reduction In One Week Kaizen
Rolling Mill 720m to 34m -95%
150 Ton Press 90 to 5 -94%
PM Punch Press 52 to 5 -90%
Hole Cut Mill 64 to 5 -92
2.5” Extruder 180 to 19 -89%
Injection Molder 120 to 15 -88%

AVG SETUP REDUCTION = 91%

 SET UP APPROACH
Separate Internal From External

No Tools

No Cranes

No Money
 PACE
• Be Aggressive

• Two Kaizens Per Week Per Facility

• Two Set Up Kaizens, One Flow, One Office

• Celebrate Your Gains

TRANSFORM THE PEOPLE
A LEAN ORGANIZATION REQUIRES;

• TEAMWORK

• TRUST

• RESPECT FOR PEOPLE

 RESPECT YOUR PEOPLE

• Listen To Them

• Support Them

• Set Stretch Goals

HOW TO GET EVERYONE ON
BOARD?

KAIZEN, KAIZEN, KAIZEN

KAIZEN IS A DOING ACTIVITY
Full Time Job For The Week

Achieve Stretch Goals By End Of The Week

Mixture Of Hourly And Salaried People

Hands On In The “Gemba”

Learning To “See”
TYPICAL RESULTS OF A ONE WEEK
KAIZEN
Cut Lead Times By 90%
Reduce Staffing From 10 To 5
Reduce Inventory By 70%
Reduce Floor Space By 50%
Reduce Defects By 60%
Reduce Travel Distance By 90%
Cut Set Up Times By 90%
Connect Customer To The Shop Floor - Pull
YOU WANT TO GET TO A
KAIZEN CULTURE
GET EVERYONE ON A KAIZEN TEAM
• Up Front Training

• Learn By Doing

• Multiple Kaizens

• Kaizen Team Leader

 GO TO THE GEMBA
• Kaizen Is A Doing Exercise

• Start With Projects That Will Give The Biggest

Financial Impact

• Set Stretch Goals

• Attendance Should Be Mandatory

 START WITH THE BIGGEST VALUE
STREAM

• Create Model Lines Or Model Factories

• Two Set Up Kaizens and One Flow

• Do The Whole Value Stream

• Don’t Forget The Office

CREATE DAILY MANAGEMENT AT THE
POINT OF VALUE ADDING
• Hourly Production Control Charts
• Quality And Productivity Measures/Trends
• Set Up Time Tracking
• Daily TPM Tracking
• Daily Meetings Countermeasures
• Constant Management Support
 REMOVE PRODUCTIVITY BARRIERS
• Multiple Job Classifications

• Piece Part Incentives

• Chairs, Food, Drinks In The Gemba

• Provide Lots Of Cross Training

 LEADERS ROLE
Hands On - - Out Front

Lead By Example - - On The Shop Floor

Learn By Doing

Commit To Becoming A Lean Expert

Drive Lean Fundamentals - No Other Option

MAKE THE CASE

The Walk Of Shame

ESTABLISH PROFIT SHARING
DUMP YOUR STANDARD COST
ACCOUNTING SYSTEM
GET MARKETING AND SALES
INVOLVED AND COMMITTED
YOU ARE RUNNING A BUSINESS
• Progress Is Faster If You Learn From Your Mistakes
• Maintain An Atmosphere Of Constant Learning
• Kaizen Work Solves Customer Problems
• You Have An Obligation To Your People
• Protect There Jobs And Provide Opportunities For
Growth And Wealth Creation
 SUMMARY

A KAIZEN CULTURE = AN UNFAIR

COMPETITIVE ADVANTAGE