Operational

Excellence
Boot Camp

Smurfit-Stone Container * Operational Excellence Boot Camp 1

Introduction and agenda review

Smurfit-Stone Container * Operational Excellence Boot Camp 2

OPX BOOTCAMP AGENDA
Start Duration Session Instructors

DAY 1 Monday
8:15 0:30 Introductions and agenda review
Icebreaker
8:45 0:30 Era 0 - What it is and what it is not.
9:15 0:30 Free floor walk exercise
0:15 BREAK
10:00 0:15 Free floor walk - recap
10:15 1:15 OPX context and overview
11:30 0:15 OPX concerns and expectations - Q&A
11:45 0:45 LUNCH
12:30 1:00 Expectations of OPX Area Team
1:30 1:15 Transformation overview
Operating system - OPX elements
0:15 BREAK
3:00 2:00 OEE breakout simulation
5:00 Adjourn
DAY 2 Tuesday
8:15 0:15
0:30
Recap Fill in the
8:30 OEE revisited
9:00 1:00 Converting set up exercise names of your
10:15
0:15
1:45
BREAK
Order readiness
instructors as
Procedures the week
Machine readiness
12:00 0:45 LUNCH progresses.
12:45 0:45 Converting set up floor walk
1:30 1:45 Workplace organization intro
Workplace organization machine clean Feel free to
Workplace organization workstations
Workplace organization WIP contact them
Workplace organization other
Workplace organization video when you have
3:30
0:15
0:45
BREAK
Converting minor stops and speed
questions in the
4:15 1:00 Converting speed simulation future.
5:15 0:30 Converting simulation report out

5:45 Adjourn

Smurfit-Stone Container * Operational Excellence Boot Camp 3

DAY 3 Wednesday
8:15 0:15 Recap
8:30 1:00 Plant targets intro
9:30 0:30 Plant targets exercise
0:15 BREAK
10:15 1:00 Performance management intro
11:15 0:30 Shift handover board exercise
11:45 0:45 LUNCH
12:30 1:00 Manning intro
1:30 1:00 Scheduling intro
0:15 BREAK
2:30 2:45 Corrugating diagnostic walkthrough
Corrugating process controls
Corrugating operations
Corrugating quality exercise
5:15 Adjourn
DAY 4 Thursday
8:15 0:15 Recap
8:30 0:30 Mindsets and capabilities
9:00 0:30 Supervisor coaching intro
9:30 2:30 Influencing techniques
Giving and receiving feedback intro
0:15 BREAK
Giving and receiving feedback breakout
Conflict resolution
SSCC harrassment policies
11:45 0:45 LUNCH
High performing teams
High performing teams exercise
1:00 1:00 Maintenance intro
0:15 BREAK
2:15 1:30 Maintenance Equipment Strategy Workshop
3:45 1:30 Diagnostic prep intro
Diagnostic prep team breakout
5:15 Adjourn

Smurfit-Stone Container * Operational Excellence Boot Camp 4

DAY 5 Friday
7:00 10:00 Rapid Diagnostic
19:00 Group Dinner hosted by F. Rossi
DAY 6 Saturday
8:15 0:15 Recap
8:30 1:30 Report outs
0:15 BREAK
10:15 1:00 Implementation phase
11:15 0:45 Wrap up and feedback
LUNCH
12:00 Adjourn

Smurfit-Stone Container * Operational Excellence Boot Camp 5

ICEBREAKER

• Get to know some more about yourself

Purpose • Learn a bit about the others on the OPX team
• Have a bit of FUN!

• Follow direction on what to do

Process

• A better understanding of you and your OPX team

End
products

Smurfit-Stone Container * Operational Excellence Boot Camp 6

Era 0 – What it is and what it is not

Smurfit-Stone Container * Operational Excellence Boot Camp 7

ERA 0 ELEMENTS

• To demonstrate how Safety, Quality, and Waste Reduction,

although already priorities of Smurfit-Stone, are still central in
Purpose an OPX environment.

• Team discussions on how to OPX can reinforce Safety,

Quality, and Waste Reduction while placing an emphasis on
Process increased throughput and productivity.

• Understanding of how SSCC’s Safety, Quality, and Waste

efforts fit into Operational Excellence
End products

Smurfit-Stone Container * Operational Excellence Boot Camp 8

ERA 0: SAFETY

Manufacturing, by definition, is dangerous work. And by running the machines faster in

the “performance-based” culture of OPX, Safety will be more important than it ever has.
As plant leaders, we are responsible for reinforcing a safe working environment, and ensuring
safe behaviors are being exhibited by our coworkers.

Why might people mistakenly think that safety is incompatible with a performance-based
culture? How can we as leaders change their minds?

What evidence could we look for to see if safety is a priority in the plant?

Smurfit-Stone Container * Operational Excellence Boot Camp 9

ERA 0: QUALITY

The purpose of the QualityONE system in the OPX environment is to ensure the
prevention and correction of processes or behaviors that contribute to inefficiencies,
waste, and customer rejects. But under OPX, when we are helping operators produce more
throughput than ever before, quality could slip and OPX will fail if we don’t do our jobs to ensure
That QualityONE does not get ignored at the expense of making more boxes. Remember: it
doesn’t matter how many boxes you make if they are of such poor quality that nobody wants to
buy them.

Why might people mistakenly think that OPX is incompatible with QualityONE? How can we
ensure improvements in both quality and throughput?

What programs/tools does Smurfit-Stone have in place to help with Quality, and how can we
ensure they are being utilized during our time in the plants?

Smurfit-Stone Container * Operational Excellence Boot Camp 10

ERA 0: WASTE

There is a common belief that if we turn up our machines to achieve higher throughput,
our Total Waste percentage will go up as well. This could be true in instances where there
isn’t an active waste management system in place. But under OPX this scenario is
unacceptable.
List a few instances of how stressing increased throughput could lead to higher total plant
waste:
–
–
–
How can we as leaders help plants both increase throughput AND improve their overall Total
Waste percentage?

What programs/tools does Smurfit-Stone have in place to help with the elimination of waste?

–
–
–

Smurfit-Stone Container * Operational Excellence Boot Camp 11

Free floor walk exercise

Smurfit-Stone Container * Operational Excellence Boot Camp 12

During your walk, observe and note:

Evidence that safety is a priority in the plant?

1. _____________________________________________________________________

2. _____________________________________________________________________

3. _____________________________________________________________________

Evidence that quality is a priority in the plant?

1. _____________________________________________________________________

2. _____________________________________________________________________

3. _____________________________________________________________________

Evidence that waste is a priority in the plant?

1. _____________________________________________________________________

2. _____________________________________________________________________

3. _____________________________________________________________________
Smurfit-Stone Container * Operational Excellence Boot Camp 13
Free floor walk recap – What did you see?

Smurfit-Stone Container * Operational Excellence Boot Camp 14

OPX Context and Overview

Smurfit-Stone Container * Operational Excellence Boot Camp 15

TODAY’S DISCUSSION

• Why do we need to change?

• How will OPX be different?

• What is the plan?

Smurfit-Stone Container * Operational Excellence Boot Camp 16

SSCC HAS TO RESPOND TO CHALLENGES IN ORDER GP
PCA
TO BE COMPETITIVE SSCC
WY
Operating margin has trailed competitors . . . IP
Percent TIN
13
11
10 10 10
9 9
8 8 8
7 7 7 7
6 6 6 6
5 5 5 5 5
4 4 4
3
0
2003 2004 2005 3Q06 YTD 3Q06

. . . as has return on assets (ROA)

Percent 15
14 14
13
12
11 11 11 11
8 8 8 8
7
6 6 6 6
5 5 5 5 5
4 4 4
3
0

2003 2004 2005 3Q06 YTD 3Q06

Note:GP through 3Q05; private company thereafter
Smurfit-Stone Container * Operational Excellence Boot Camp 17
Source: Deutsche Bank 12/18/06 Containerboard Quarterly
TO MOVE FORWARD, THE EXECUTIVE TEAM HAS SET AN Focus of
our team's efforts
AGGRESSIVE AGENDA FOR CONTAINER DIVISION
Themes

• Rightsizing and properly aligning the organization

Functional • Building a talent pool – both internal and external Getting the right people
realignment • Focusing on training and development focused on the right
• Defining clear metrics and accountability things
• Providing rewards and feedback on performance

• Prioritizing $500MM+ in CapEx to achieve

Scaling and $325MM+ in savings
capital strategy • Rightsizing the organization Executing the right
– Roofs capital is critical to our
– Corrugators success
– Converting
• Supporting growth and reducing costs

• Increasing throughput of our machines

Operational • Driving sustainability with cultural change
– Standardized processes Capital alone is not the
Excellence
– Training & development with robust talent answer – we have to
management execute
– Focus on metrics and accountability
• Building customer credibility – making it easier for
our customers to do business with Smurfit-Stone

Source: SSCC executiveSmurfit-Stone

team Container * Operational Excellence Boot Camp 18
OPERATIONS IN THE PLANT: SSCC NEEDS TO IMPROVE PERFORMANCE
External benchmarking demonstrates we are not running competitively

Production per Plant

1,000
– By Company, 2005 –
908 889
900

800 765

700 654
MSF
Shipped 600 546
Per 500

Plant 400

300

200

100

0
Weyerhaeuser Georgia Pacific Temple Inland International Smurfit Stone
Paper
Number of Box 86 54 69 67 130
Plants
Volume (BSF) 78.1 48 52.8 43.8 80.8

*57 plants to close gap, assuming 20% volume loss

Smurfit-Stone Container * Operational Excellence Boot Camp 19
Source: Pulp & Paper, June 5, 2006
CORRUGATOR OPERATIONS: SSCC NEEDS TO IMPROVE
PERFORMANCE
External benchmarking demonstrates we are not running competitively

100 Smurfit-Stone Corrugators

MLF/MH
45
Only 6 of our corrugators
40
above competitor's average

35
Competitor #1
30

25

20

15

10

Smurfit-Stone Container * Operational Excellence Boot Camp 20

ROTARY DIE CUTTER OPERATIONS: SSCC NEEDS TO IMPROVE
PERFORMANCE
External benchmarking demonstrates we are not running competitively

Rotary Die Cutter performance

MSF/MH vs. MSF/setup

TAPPI

SSCC

Smurfit-Stone Container * Operational Excellence Boot Camp 21

TODAY’S DISCUSSION

• Why do we need to change?

• How will OPX be different?

• What is the plan?

Smurfit-Stone Container * Operational Excellence Boot Camp 22

OPERATIONAL EXCELLENCE IS THE WAY WE WILL OPERATE OUR
MANUFACTURING FACILITIES

Established • Baseline performance in safety, quality, waste and

operational environmental elements
fundamentals • Targets established and communicated

Throughput • Operate machines at a higher level of performance

focused • Schedule the machines to minimize cost per unit
• Utilize assets of an area in an optimal way

Leverages • Clearly define the standardized “Smurfit-way”

standardized • Leverage expertise of Smurfit-Stone experts and
practices demonstrated best practices from across the
organization

• Operating targets for regions, areas, and plants

Expectations and • Key metrics for individuals
accountability • Accountability for performance

Smurfit-Stone Container * Operational Excellence Boot Camp 23

OPERATIONAL EXCELLENCE PRIORITIZES THE EFFORTS TO
ACHIEVE A BEST-IN-CLASS OPERATING SYSTEM
OPX horizons OPX focus

Era 2

Era 1
“Enhanced Manufacturing
Excellence”
Era 0
“Core Manufacturing
Excellence”

OPX themes “Basic Manufacturing”

Core technical • Safety • Performance • Supply chain/trailer

elements • Waste management utilization
• Quality • Performance • Maintenance (v 2.0)
• Environmental • Set-up process • Scheduling (v 2.0)
• Maintenance (v 1.0) • Enhance printing
• Scheduling (v 1.0) • Lean
• Roles and
responsibilities
Smurfit-Stone Container * Operational Excellence Boot Camp 24
OPERATIONAL EXCELLENCE IS AN END-TO-END TRANSFORMATION

Operational Excellence (OPX) focuses on creating and managing a

best practice manufacturing system through its customer-centric,
performance-based culture

Standardized set of
OPX performance expectations
Management to support continuous
System improvement
Standardized set
OPX Operating
of practices and
System
procedures
Smurfit-Stone Creating a performance
Performance based culture thorough
Culture training and capability
building

Smurfit-Stone Container * Operational Excellence Boot Camp 25

OPERATIONAL EXCELLENCE IS AN END-TO-END TRANSFORMATION

Operational Excellence (OPX) focuses on creating and managing a

best practice manufacturing system through its customer-centric,
performance-based culture

Tools
OPX • Visual management boards
Management • Machine operating logs
System • Standard metrics and
Tools targets
• OPX Playbook OPX Operating
• SSCC SOPs System
• Local SOPs
Smurfit-Stone Tools
Performance • Roles descriptions
Culture • Talent review process
• Leadership
development/training

Smurfit-Stone Container * Operational Excellence Boot Camp 26

TODAY’S DISCUSSION

• Why do we need to change?

• How will OPX be different?

• What is the plan?

Smurfit-Stone Container * Operational Excellence Boot Camp 27

OPERATIONAL EXCELLENCE OBJECTIVES AND PROGRESS
OPX objectives
• Improve productivity in operations
– Focus on throughput
– Drive standardized practices
– Clear performance metrics / targets and
leadership accountability
• Rationalize plant network with improved
throughput – doing more with less
• Build customer credibility – making it
easier for customers to do business with
Smurfit-Stone
• Reinforce that the AOM is the key line
manager responsible for productivity and
safety results
• Create a common scorecard that
incorporates scaling and productivity
aspirations
Smurfit-Stone Container * Operational Excellence Boot Camp
To-date results and path forward
• OPX tools and playbook created, updated and
successfully utilized
• Defined clear performance measures
• OPX rollout team and training program to build
capabilities around the standardized OPX solution
• Multiple waves of Advanced OPX areas working
simultaneously with OPX Teams
• Diagnostics validate 20% to 40% throughput
opportunity on current asset base
• Rollout plans and targets provide OPX to core
plants by mid-2008; linked with scaling and capital
plans
• OPX principles are being pushed through division
beyond initial focus areas, with reported
improvement on targeted machines
28
OPX ROLLOUT MUST BALANCE NEED FOR SPEED OF IMPACT WITH THE
OBJECTIVE OF INSTALLING SUSTAINABLE CHANGE
OPX constraints
• Rollout compute by mid-2008
(18 months) to meet SSCC
commitments
• Limited to 10 OPX
champions by pilot resources
• OPX design and rollout
supports area concept, while
driving throughput and plant
level capabilities
• Canada supported with
separate team seeded with
standard OPX content due to
visa obstacles
Smurfit-Stone Container * Operational Excellence Boot Camp
Rollout design
Assumption
1 Line leadership responsible for OPX
installation (AOM, Plant managers)
2 Defined OPX pre-requisites are in
place
3 3 months per wave (18 month timeline
= 6 waves)
4 2 OPX champions lead each
installation (5 installs per wave)
5 Area and plant champions pull forward
to wave ahead
6 Rollout focused on area
• 2 week diagnostic of area
• 10 week installation at primary plant
with OPX coaches
• Area and plant OPX champions
install in area
• Area and plant OPX champions staff
7 Targeted areas will be selected for
Advanced-OPX self-installation
Rationale
• Sustainable change must be embraced
and owned by the line – and down to
the floor
• Establishes a working baseline
• Provides data for initial diagnostic
• Experience indicates at least 3 month
to ensure real change
• Ensures consistency, but maximizes
leverage of resource
• Steep learning curve in installation,
allows more “learn-by-doing”
• Diagnostic is most tricky, and really
challenges conventional norms
• Initial install builds capabilities of
area/plant team
• Subsequent plant install reinforces area
ownership
• Speeds deployment of OPX by
providing standardized OPX approach
for areas meeting performance
improvement prerequisites
29
ROLLOUT APPROACH DETAIL – WAVE 1 and 2 FOCUS OPX focus area
2007 OPX follow-on area
Mid-Feb Mar Jun Sep

Wave 0 Wave 1 – two areas

OPX Bootcamp Atlanta area / Covington Atlanta area / E. Atlanta

– all Wave 1 personnel OPX champion 5 Area OPX champion 1
Area OPX champion 1 + 3 pull forward Plant OPX champion 1
Prerequisites Plant OPX champion 3 + 3 pull forward
– Wave 1 areas Atlanta area / Chattanooga
Area OPX champion 1
1 Data collect in place Plant OPX champion 1
2 Visual management
boards installed
3 Management-super- Alabama area / Montgomery Alabama area / Birmingham
visor talent review OPX champion 5 Area OPX champion 1
4 Plant communication Area OPX champion 1 + 2 pull forward Plant OPX champion 1
Plant OPX champion 2 + 2 pull forward

Wave 2 – five areas

Wave 2 pull
Advanced OPX forward
begins in May 2007; Primary plant - each area (x5)
runs in parallel OPX champion 2
Area OPX champion 1+1
Plant OPX champion 2+1
Locations
• Philadelphia Wave 3 pull
• Winston-Salem • Atlanta forward
• Alabama • Kansas City
• Ontario
• Eastern Shore
• Los Angles
Smurfit-Stone Container * Operational Excellence Boot Camp 30
ROLLOUT DETAIL – WAVE 1 and 2 FOCUS
Updated Sept 2007

Geography Key activities Dates

Atlanta area • Bootcamp I 2/19 – 3/2

Wave 1 Alabama area • Wave 2 team on-boarding 3/5 – 3/9
• Diagnostic/planning 3/5 – 3/23
• Implementation 3/26 – 6/1
• Area-wide installation 6/4 – 8/31

OPX- One area from • Advanced Bootcamp 4/16 – 4/25

Advanced each region • Diagnostic/planning 4/30 – 5/25
• Implementation 5/29 – 8/4

Philadelphia • Wave 3 team on-boarding 6/4 – 6/8

Wave 2 Kansas City • Diagnostic/planning 6/4 – 6/22
Eastern Shore • Implementation 6/22 – 8/31
Los Angeles • Area-wide installation 8/31 – 10/31
Ontario

Smurfit-Stone Container * Operational Excellence Boot Camp 31

ROLLOUT DETAIL – WAVE 1 and 2 FOCUS
Updated Sept 2007

Geography Key activities Dates

NW area • Wave 3 team on-boarding 9/4 – 9/7

Wave 3 New Eng area • Diagnostic/planning 9/4 – 9/14
Wisc area • Implementation 9/17 – 11/23
Ozarks area • Area-wide installation 11/26 – 6/1
Ontario (Milton) 12/4 – 2/22/08

OPX- Mid East • Diagnostic/planning 12/3 – 12/14

Advanced (2) Richmond • Implementation 12/17 – 2/22
E. Tenn • Balance of plants in areas 3/2008 ->

MN-ND area • Wave 4 team on-boarding 12/3 – 12/7

Wave 4 Richmond area • Diagnostic/planning 12/3 – 12/14
E. Texas area • Implementation 12/17 – 2/22
S. Ohio area • Area-wide installation 3/3 – 5/23/08
Ontario (Burlington)

Smurfit-Stone Container * Operational Excellence Boot Camp 32

PREPARATIONS FOR WAVES OF INSTALLATION

Preparation Status

Area selection • Wave 4 plant selection complete • Strong team of OPX

• Advanced OPX (2) areas nominated and practitioners is in place
approved by RVPs for self-implementation
trials • Team is working with future
waves of OPX plants to create
Era 0 prerequisites foundation for installation
• Era 0 base lining and assessments completed - Technical support
• Advanced OPX areas meet prerequisite criteria - Training/capability building
- Talent reviews
Boot camp/training
• Area OPX Leaders, PM’s,AOM’s and RVP’s • High performing leaders in
• Boot camp 6 & 7 – 2007 areas with a foundation in
• More in 2008 performance are receiving
training on OPX to jump-start
performance installation
Materials and tools
• Playbooks, OPX tools distributed through • Rollout plans and targets
AOMs and available on the portal OPX page
provide OPX to core plants by
Q1 2008; linked with scaling
Talent management and capital plans
• AOM program in place
• RVPs and cognizant AOMs to create
development plans for supervisory personnel
Smurfit-Stone Container * Operational Excellence Boot Camp 33
OPX ROLLOUT APPROACH INCORPORATES LESSONS LEARNED IN THE
PILOT WITH FOCUS ON BUILDING LEADERSHIP AND TECHNICAL
CAPABILITIES

Wave OPX installation Advanced OPX approach

OPX and local area team complete a full For areas with local leadership and basic
OPX installation in “A” plant over 3 prerequisites in place to drive OPX
months, followed by local area team principles in place of full wave team
completing installation in area installation

Wave 1 areas (March – May 2007) Advanced OPX (April 2007 bootcamp,
• Alabama May – July 2007 implementation)
• Atlanta
• Winston-Salem (Jan – Feb pilot) • N. Ohio
• Sioux Land
Wave 2 areas (June – August 2007) • Chicago
• Philadelphia • W. Tennessee
• Kansas City • St. Louis
• Eastern Shore • El Paso
• Los Angeles
• Ontario

Smurfit-Stone Container * Operational Excellence Boot Camp 34

OPX ROLLOUT APPROACH INCORPORATES LESSONS LEARNED IN THE
PILOT WITH FOCUS ON BUILDING LEADERSHIP AND TECHNICAL
CAPABILITIES

Wave OPX installation Advanced OPX approach

OPX and local area team complete a full For areas with local leadership and basic
OPX installation in “A” plant over 3 prerequisites in place to drive OPX
months, followed by local area team principles in place of full wave team
completing installation in area installation
Wave 3 areas (Sept – Nov 2007)
Advanced OPX 2 (Nov - February 2008)
• New England
• Wisconsin • Mid East
• Ozarks • Richmond
• Northwest • Eastern Tennessee
• Ontario (Burlington)
Wave 4 areas (Dec – February 2008) Boot Camps
• Florida
• Minnesota – North Dakota 6. October 2007 – City of Industry
• Southern Ohio 7. November 2007 - Wakefield
• East Texas
• Quebec

Smurfit-Stone Container * Operational Excellence Boot Camp 35

LESSONS LEARNED FROM OPX WORK TO DATE

• Certain pre-requisites must be in place to make progress against OPX goals:

– Era 0 elements of Safety, Quality, Waste, etc. (OPX Facility Checklist CD S.O.P. 2.0.01a).
– Equipment condition (basics), ideally machine readiness audits are completed.
– Personnel and talent management (i.e., competence in key positions, absenteeism issues
resolved, etc.)

• OPX requires a huge mindset shift for key roles:

– Production managers (from process managers to change leaders).
– Supervisors (from expediters to leaders).
– Schedulers (from push to pull & systems thinking).

• Enabling talent and capability growth:

– Critical to take action on underperformers quickly with performance plans.
– Active reinforcement of desired behavior and skills.
– Need to focus on communicating goals and expectations at every level, to each individual.

• Managing demand to support operational goals in target facility is critical:

– Ensure that target plant is loaded with demand to enable installation and sustaining of
OPX solution.
– Provide demand planning support and tools to support effective decision making.
Smurfit-Stone Container * Operational Excellence Boot Camp 36
OPX BOOTCAMP BUILDS CHANGE LEADERSHIP CAPABILITIES AROUND
THE COMMON OPX SOLUTION
OPX Bootcamp
Program description
• Focused transformation leadership capability building program for line managers and
supervisors
• Hands-on learning exercises in technical, management, and leadership topics
• Taught by line leaders experienced in Operational Excellence

Facilitators
• OPX Leadership
• OPX Champions / practitioners
• OPX Center staff
• Technical experts

Training objective
Provide basic tools for implementation, including:
• OPX design and concept understanding
• Basic coaching skill building
• Introduction to analytical skills for diagnostic and performance management
• OPX implementation processes and tools

Smurfit-Stone Container * Operational Excellence Boot Camp 37

WITHIN EACH AREA, OPX IMPLEMENTATION WILL FOLLOW A
5-STEP TRANSFORMATION APPROACH AT THE PRIMARY PLANT
OPX approach Partial OPX team involvement

1 2 3 4 5

Prepare Diagnose Design Implement Sustain

Timing (weeks) Prior to start 2 0-1* 10 Ongoing

Description • Establish prerequisites • Create baseline • Design endstate • Execute through • Check-in and follow-
• Fill data requests • Prioritize efforts • Create workplan plant team on coaching
• Introductory training • Establish unit • Define report out • Plan for area • Upward feedback on
specific targets requirements implementation OPX

Key activities 1.1• Collect data 2.1• Develop overall 3.1• Develop master 4.1• Rollout and re- 5.1• Follow-up
plant baseline implementation fine the phased performance
1.2• Plan out important (MIFA & OEE) plan OPX elements dialogues (area
meetings and and plant)
reviews 2.2• Plant opportunity 3.2• Tailor OPX ele- 4.2• Rollout the
assessment of ments to suit performance 5.2• OPX team circle
1.3• Prepare local man- OPX elements local plant con- management back for audit
agement for OPX ditions system and potential
2.3• Prioritization of Kaizen events
1.4• Establish the team, OPX element 3.3• Develop detailed 4.3• Coach plant
organise logistics implementation workstreams management 5.3• Update OPX
and provide OPX action plans transformation
team training 2.4• Set plant perfor- 4.4• Steering approach and
mance targets 3.4• Define steering Committee playbook based
Committee report out on lessons learnt
review

Key individuals • RVP and AOMs • OPX team • OPX team • Plant team • Plant management
• Plant management • Plant team • OPX team • RMMs
• OPX leads • OPX PMO

Smurfit-Stone
*Design requirements dependent on complexity Container * Operational Excellence Boot Camp
of plant implementation 38
IMPLEMENTATION IS FACILITATED BY OPX DEDICATED RESOURCES,
THOUGH RESPONSIBILITY FOR EXECUTION LIES WITH LINE
MANAGEMENT
Roles/accountabilities OPX team Line leadership Roles/accountabilities
• Drive and track OPX implementation, OPX Steering Committee
including OPX resource allocation
• VP Manufacturing • Regional VPs
• Guide the program and remove • VP OPX
roadblocks at a corporate level
• Maintain OPX content library

• Overall accountability for local delivery • Overall accountability for area and plant
• Ensure resources allocated to high-priority OPX Champion delivery
OPX elements Team leader Area Mgr • Remove roadblocks at an plant level
• Manage the project and track targets (1 per area team) • Dedicate area resources
• 10-20% time commitment

• Develop and lead OPX process for each • Serve as the local OPX custodian, from
workstream diagnostic through embedding phases
OPX Champion Plant Manager &
• Provide OPX expertise and experience (1-4 per area team) Plant Supint.
of project
• Deliver agree-upon targets
• Manage overall implementation
• 50% time commitment
• On the floor rollout support from Area & Plant • Provide ‘on the ground’ expertise to
diagnostic to implementation OPX Team tailor approach to plant conditions
• Become OPX team members by Supervisors • Initially provide workstream support in
(5-8 per area team)
learning process Local + pull forward diagnostic & design but then move to
“generalist” role during implementation
• 50% time commitment

Examples include: • Undertake implementation

• Undertake machine audits SSCC experts and • Provide improvement feedback
Hourly workers
• Zero/rainbows installation external support
• Machine vendors to resolve
issues
Smurfit-Stone Container * Operational Excellence Boot Camp 39
Note:All positions are full-time, except as noted
Expectations of OPX Area Team

Smurfit-Stone Container * Operational Excellence Boot Camp 40

THERE ARE PERFORMANCE EXPECTATIONS AT EACH LEVEL OF
THE ORGANIZATION

Deliver ~200m of
operational cost
Deliver throughput savings in 2 years
Act as OPX change uplift at each plan
agents
Support and SSCC
collaborate with OPX 1
OPX team
2
OPX individuals
3 • Full Time Members
Plant • Area Champions
• Plant Champions

Smurfit-Stone Container * Operational Excellence Boot Camp 41

 A DESIRED PROFILE EXISTS FOR SUCCESSFUL CHANGE AGENTS
Change agent example 1
Key Descriptio
criteria n

• Energetic and enthusiastic

Right attitude • Very high personal aspirations
• Extreme determination
• Willingness and ability to take initiative
• Eagerness for change and new experiences Observing Supplying
• Inclination to take personal risks internal and knowledge,
• “Do it, try it, fix it” mentality external analyzing,
• Willingness to set & accept stretch targets developments and testing
recommen-
• Subject matter expert in respective dations
Appropriate areas/(s) of responsibility
knowledge • Potential process owner
Rolling
• Good communication skills up the
• Good analytical and problem-solving skills sleeves
Skill • Able to operate under instability and Communicating
uncertainty team and Being a
• Highly effective under pressure organization sensor
• Well organized for
• Clear ability to disaggregate higher goals into feedback
focused programs and actions from
• Unusual ability to coach, motivate, and organi-
mobilize others zation
• Respected by shop-floor employees
• Strong reputation and credibility in
making things happen
• Role model, attracting new change leaders

Smurfit-Stone Container * Operational Excellence Boot Camp 42

 A DESIRED PROFILE EXISTS FOR SUCCESSFUL CHANGE AGENTS
Change
Attribut
agent example 2
e Description
The individual is interested in learning new concepts and ideas; is highly
Interest enthusiastic and inquisitive; shows tremendous energy in wanting to absorb
knowledge; is excited about applying new skills to different situations and
creating changes

The individual is self-driven to achieve results; is goal oriented; takes pride in

Motivation delivering work of highest quality; can handle high level of stress; sets high
aspiration for himself and others around him

The individual takes ownership of work entrusted to him; can be trusted in

Responsibility delivering work assigned according to preagreed time line; has a never-say-die
attitude toward work; willing to provide more than what is required to achieve
the best results

Leadership/ The individual exhibits great ability to lead; is well respected by peers and others;
management is sought for opinions by those around him; can manage teams effectively and
skills foster a productive working environment; can give guidance and has
mentorship ability
The individual has strong ability to analyze, disaggregate information in a
Analytical structured way, and draw purposeful insights; able to identify core issues; has
shown great capability in developing recommendations that are targeted toward
the issues
at handSmurfit-Stone Container * Operational Excellence Boot Camp
Source: Team analysis 43
 A DESIRED PROFILE EXISTS FOR SUCCESSFUL CHANGE AGENTS
(CONTINUED)
Change agent example 2
Attribute Description
The individual is able to draw connections between issues and derive the related
Forward
implications; constantly aware of the next level of improvement required in
Thinking
area of work; seeks solutions that eradicate the root cause of problems instead of
containing problems

The individual can work efficiently alone; able to structure direction of work with
Independent minimal guidance and to execute work effectively; able to resolutely resolve
problems along the way

The individual can work effectively in a team environment; proactively help team
Team player members; able to develop good relationships with team members; shows desire
for team to excel, and participates actively in team problem-solving meetings

The individual is able to communicate thoughts well both orally and in writing; has
Communi-
good presentation skills and is able to answer questions confidently; effective
cations
communicator with people throughout organization

The individual feels at ease in any new environment; can adapt to the work
requirements in the new place quickly; able to interact and form relationships
Adaptability
with key personnel quickly in a new setting; can integrate into the culture of the
new place easily and get work moving quickly; is welcomed by the new
environment
Smurfit-Stone Container * Operational Excellence Boot Camp 44
Source: Team analysis
 FOR PLANT MANAGERS AND SUPERVISORS THERE ARE ALSO
EXPECTED BEHAVIORS
Behavior
Role-modeling
appropriate behaviors
“I see superiors, peers, and
subordinates behaving in
the new way”
Understanding and
believing in the project
“I know what is expected of
me – and I agree with it and
it is meaningful”
Developing talent
and skills in the team
“I have the skills and
competencies to behave
inŠ the new way”
Following the structures
and processes that are
put in place
“The structures, processes
and systems reinforce the
change in behavior I am
being asked to make”
Managers
• Taking an interest in plant changes
• Actively participating in the problem
solving process
• Speaking out as an advocate for OPX
• Spending time with supervisors to
ensure understanding of the effort
• Explaining the need for success of OPX
• Supporting and driving training and skill
building
• Taking time for one-on-one coaching of
Supervisors
• Executing on OPX elements
– Conducting floor audits
– Holding Sups and hourly workers
accountable
Smurfit-Stone Container * Operational Excellence Boot Camp
Supervisors
• Taking an interest in plant changes
• Actively participating in problem solving
workshops and performance
management meetings
• Speaking out as an advocate for OPX
• Asking questions when you do not
understand what is being asked of you
• Spending time with hourly workers to
ensure understanding of the effort
• Taking time to explain to hourly workers
the need for success of OPX
• Taking time for one-on-one coaching
of hourly workers
• Listening and learning from Managers
and other Supervisors about how to
improve performance
• Executing on the OPX elements
– Conducting floor audits
– Holding hourly workers accountable
45
 AS AN OPX TEAM YOU ARE EXPECTED TO DELIVER SIGNIFICANT
AND SUSTAINABLE THROUGHPUT IMPROVEMENT

Take the plant through a Ensure the transformation is

step change in throughput
improvement that gets
them a significant way
towards their new OPX
New OPX targets
target
sustainable using holistic
approach:
• Operating system
• Management systems
• Mindsets and capabilities

Plant
Throughput

Time
Beginnings of the Step-change Sustained change
change process improvement during in performance
OPX team post OPX
involvement involvement
Smurfit-Stone Container * Operational Excellence Boot Camp 46
 Area and Plant OPX Champion Rollout
Area Alpha Area Beta Area Beta
Wave A Plant Plant 1 Plant 2
4 8 12 4 8 12 4 8 12 4 8 12 Comments

OPX Team focus on Alpha

OPX Team plants

Area Champion Area and Plant champions from

the next Alpha Plant train in the
implementation prior to entering
their region
Alpha Plant Champion

Beta Plant Champion Plant Champions from Beta

Plants join the OPX Team
during their Area’s OPX
Implementation at the Alpha
Beta Plant Champion
Plant

Smurfit-Stone Container * Operational Excellence Boot Camp 47

 Expectations of the OPX and Area OPX team

Key Personnel Expectations

• Use the OPX Playbook, tools and other resources to help transform the plant.
OPX Team • Train key personnel in the use of OPX tools
• Communicate findings and progress with local plant management on progression
of the work plan.
• Improve Plant through put.

• Learn the OPX Playbook, Tools and determine other resources that are
Area Champion available and how to access them.
• Work with Site Leaders to learn Preparation, Diagnostic, Design and
Implementation strategies.
• Work with Area Operations Manager to determine an implementation
schedule for Beta plants and the resources that will be required.
• Lead the Area OPX Team in the Beta Plant implementations.

• Learn the OPX Playbook, Tools and determine other resources that are available
Plant Champion and how to access them.
• Work with respect to the Work plan and give feed back as to the successes and
failures.
• Apply the tools to determine the greatest opportunity in the plant and drive through
put.
• Deliver a consistent message to all management and shop floor employees.

Smurfit-Stone Container * Operational Excellence Boot Camp 48

OPX concerns and expectations

Smurfit-Stone Container * Operational Excellence Boot Camp 49

CONCERNS AND EXPECTATIONS

Purpose • To air the desires/concerns of Boot Camp students regarding OPX

• 5 min – Write at least one hope and one fear on separate Post-it notes
• 2 min – Place Post-its onto white board under broad categories Hopes and Fears
Process • 5 min – Arrange Post-its into more specific categories
• Remaining time – Discuss general categories

End products • Discussion of general hopes/fears of upcoming work for OPX Team

Smurfit-Stone Container * Operational Excellence Boot Camp 50

Transformation overview

Smurfit-Stone Container * Operational Excellence Boot Camp 51

AGENDA

• What is “systems thinking” and transformation?

• What is a manufacturing transformation?
• What does success look like?

Smurfit-Stone Container * Operational Excellence Boot Camp 52

A TRANSFORMATION IS A FUNDAMENTAL, SUSTAINABLE CHANGE . . .

Enhanced quality,
cost, and service level Not just incremental;
by eradicating waste, a quantum leap
variability, and inflexibility improved over time

A manufacturing or service operations transformation is a

conscious and sustainable transition to a significantly
higher level of performance required to execute the
business strategy, based on a fundamental shift
followed by continuous improvement in underlying
capabilities, mindsets, systems, and processes

• Marketing strategy • Operating system,

• Outsourcing • Management infrastructure
• Technology • Capabilities, mindsets, and behavior
• Network configuration

Smurfit-Stone Container * Operational Excellence Boot Camp 53

. . . BUT TRANSFORMATIONS ARE DIFFICULT TO DO AND OFTEN FAIL

Failure mode Description Result

Tool focus Implement key manufacturing
tools across business to
deliver impact
Off the shelf Company replicates what
another has successfully
implemented
Leadership Small team of sustained
and visible leadership
• Not sustainable because
no system established
• Dropped due to “flavor
of the month” syndrome
Achieved results
• Not tailored to unique
culture and levers, • Short- and long-
therefore results and term results well
sustainability falter below expectations
• Conviction at the
• Not supported because most senior levels
viewed as individual effort not translated into
vs. business strategy frontline change
• Limited to BU level

Capabilities Capabilities developed at • Not sustainable due to

certain levels across the lack of practitioners to
organization support
• Difficult to extend/lack
of skills
Involvement Involvement by the few • Organization rejects
who believe at the top change and reverts
back to “comfortable”
practice
Smurfit-Stone Container * Operational Excellence Boot Camp 54
SUCCESS REQUIRES SIMULTANEOUS TACKLING OF THE 3 SOURCES OF
LOSS – DEFINITION OF LEAN

Waste Variability Inflexibility

Sample distribution

Higher Addition-
“Voice of the spec. al cost
customer”

LSL USL Basic

spec.

Price Cost
Standard deviation
customer
LCL UCL
will pay
“Voice of the process”

Typical focus of
Typical focus Typical focus of debottlenecking,
of lean Six Sigma FMS, or SMED
improvement improvement activity
work work
Smurfit-Stone Container * Operational Excellence Boot Camp 55
TRANSFORMING OPERATIONS REQUIRES A 3 DIMENSIONAL APPROACH

“The way physical

assets and resources
“The formal structures,
are configured and
processes, and
optimized to create value
Management systems through which
and minimize losses”
systems the operating systems
are managed to deliver
the business objectives”
Operating systems

Mindsets and
capabilities

“The way people think, feel,

and conduct themselves in
the workplace, both
individually and collectively”

Smurfit-Stone Container * Operational Excellence Boot Camp 56

 Success
DETAILS requires an integrated
OF OPERATIONAL EXCELLENCEsystem of technical,
managerial, and cultural excellence
Attribute World-class manufacturers have . . .

1 • Clear links between the technical operating system to manufacturing

Operating
strategy
system
• Material and information flows that minimize movement, tie production
rates to true customer demand, and build only what is consumed or
ordered
• Fully defined work standards, maintenance and quality systems
• Full understanding of the operating system by all employees, down to
front line

2 Management • Rigorous performance and health management systems

infrastructure • Organization structure (re)design to best match operating system
needs
• Capability building structure and processes, with continuous
improvement infrastructure to drive sustained change

3 • Explicit shifts in mindsets and behaviors down to the front line

Mindsets, • Full buy-in and understanding of roles for each individual
capabilities, • Fully and continuously aligned leadership, which can resolve issues
behaviors quickly
• Appropriate skills at appropriate levels within the organization
Smurfit-Stone Container * Operational Excellence Boot Camp 57
IF ANY OF THE 3 ELEMENTS ARE MISSING, CHANGE WILL FAIL
Operating
systems
Risk of one-time impact eroding over time

due to lack of management focus and

insufficient frontline buy-in and capabilities

Management
systems
Limited initial impact; slow improvement
trajectory due to lack of operating system
expertise and buy-in

Mindsets and
capabilities
Impact constrained by existing operating
system design and existing management
systems

Smurfit-Stone Container * Operational Excellence Boot Camp 58

Source:Company
WHAT IS MANAGEMENT INFRASTRUCTURE? (1 of 2)
Operations organization
• What is the right size/
structure of the frontline
team?
• What is the right role
profile for the frontline
leader?
• How should frontline
teams link
organizationally to the
top management?
• How should frontline
support be organzed?
Smurfit-Stone Container * Operational Excellence Boot Camp
Performance
management CI infrastructure
• What are the right metrics • What is the best way to
to track performance of codify the production
operations and people? system and improvement
tools required?
• How should tracking and • How should a CI office be
reporting systems be set up and run?
designed? – Size
– Skills
• How should targets be set – Relationship to line
and deployed? • How should the CI office
progress over the change
journey?
• How should performance
review processes be run?
• How should incentive
systems be set up and
run?
59
WHAT IS MANAGEMENT INFRASTRUCTURE? (2 of 2)
Skills and capabilities
• How should operating skills be
defined and captured?
• How should management skills be
defined and captured?
• What processes and programs are
needed to provide operators and
managers with the skills to do the
job?
Smurfit-Stone Container * Operational Excellence Boot Camp
Functional support processes
• How should the quality system be
set up and run?
• What changes to the financial
systems and processes –
especially cost accounting and
budgeting – are needed to align
to the lean operating system?
• How should HR processes –
resource planning, labor
scheduling, attendance, etc. – be
provided?
• What IT systems are required to
support the operating system?
60
EXPERIENCE CONFIRMS THAT, WITHOUT EFFECTIVE CASE STUDY

PERFORMANCE MANAGEMENT SYSTEMS, IMPROVEMENTS

ARE HARD TO SUSTAIN

During transformation After transformation

 Systematic transformation • Focus on model value

of model value stream stream dissolved
completed • Data forgotten and results
 Everyone involved unknown Performance
 Improvements delivered • Physical changes lost measurement
to targets relevance; some unravelled • Is critical to
sustainable success
 Productivity: + 25% • Must be
16.0 16.0 institutionalised
12.0 12.0
during transformation
• Stimulates and
8.0
2 4 6 8 10 12 14 16
8.0
18 20 22 24 26 28 30 32
demonstrates senior
management
 Defects: 6-fold reduction commitment

Smurfit-Stone Container * Operational Excellence Boot Camp 61

AGENDA

• What is “systems thinking” and transformation?

• What is a manufacturing transformation?
• What does success look like?

Smurfit-Stone Container * Operational Excellence Boot Camp 62

IMPLEMENT – CONDUCT MINI-TRANSFORMATION IN EACH AREA,
LEVERAGING A STANDARD APPROACH

1. Prepare 2. Diagnose 3. Design 4. Plan 5. Implement 6. Refine

Diagnose
Design the
against the
future-state
elements of the
operating
operating
system
system

Diagnose Design the Review and

Develop tactical
Establish team, against the management Implement improve the
implementation
communicate elements of the infrastructure according to change, and
plans by work
and gather data management to support the work streams coach line
streams
infrastructure new OS managers

Diagnose Define the

against the mindsets,
elements of the capabilities,
mindset, and behaviors
capabilities, and to underpin the
behaviors new ways of
working

1-2 weeks 3-8 weeks 2-3 months 5-8 months

Smurfit-Stone Container * Operational Excellence Boot Camp 63

AGENDA

• What is “systems thinking” and transformation?

• What is a manufacturing transformation?
• What does success look like?

Smurfit-Stone Container * Operational Excellence Boot Camp 64

KEY DIFFERENCES BETWEEN TRADITIONAL PERFORMANCE
IMPROVEMENT AND A TRANSFORMATION

Traditional improvement initiatives . . . Operations transformation . . .

Are one-off interventions to Combine deep technical change with
solve specific business problems cultural change

Inject external capabilities with Require a major upgrade in capabilities

limited skill transfer to help change stick

Place most emphasis on “bulletproof” Strike a balance between the best

problem solving solution and the companies ability to
make it happen

Are typically focused in time Require longer time frames to

(6 weeks to 6 months) succeed (1-3 years)

Are run by a dedicated project team, Are led by senior management engaging
with leadership acting as a steering the line, typically supported
committee by a program office

Primarily use existing management Often require top grading, personal

and workforce transformation, and external hiring
to revitalize the organization
Smurfit-Stone Container * Operational Excellence Boot Camp 65
LINE TRANSFORMATION IS DRIVEN BY OPERATING SYSTEM AND
MANAGEMENT SYSTEM PROCESS CHANGES

. . . are removed through installing OS and

Classical “cultural” weaknesses . . . MS processes, which drive cultural change

“Facility managers • Operating system

do not spend “We don’t have the – Workload balance at Takt time
sufficient time on the feeling that past – Pull-based production
shop floor” improvement – Rigorous standards (standard work, issue
programs have escalation procedures)
generally been
“The facility successful” • Management systems
management – Problem solving at heart of daily activity
does not – Daily data-driven performance review
communicate – Demanding performance dialogues
enough with us” “We do not get
good support from
people in other • Cultural change
“I don’t always functions (e.g., – Increased capability to execute these
receive assembly, planning, processes and problem solve on the line
adequate logistics, quality, – Supervisors on the floor, solving problems
training to engineering)” daily using data
perform my job”
– Operator acceptance of tighter standards
– Increased visible support of management
to lead performance

Smurfit-Stone Container * Operational Excellence Boot Camp 66

Source: McKinsey
~75% OF TIME IS DEDICATED TO IMPLEMENTATION CONCEPTUAL

OF CHANGE
Think 25% Act/implement 75%

Diagnose Create flow

Design Build capability Create visual

management

Plan Build in quality Coach managers

Smurfit-Stone Container * Operational Excellence Boot Camp 67
TRANSFORMING MINDSETS AND CULTURE IS PARAMOUNT

1 The goal of mindset and capability change is to instill a

performance culture, led by people that are capable and
desire to achieve dramatically improved performance

2 “Hard” changes to the operating system and management

system, installed during the mini-transformation, drive a large
portion of the desired mindsets and capability change simply Large scale change
because they create a “new way of life” programs must

3 In addition, the mini-transformation must bring changes in • Install the systems that
experiences, expectations, role modeling, and skills to create this “new way of
drive real ability and desire to run the line better life” in operations

4 Each organizational position has a specific role to play once • Train change agents to
the production system is installed, and a desired mindset kick-start the change
and capability level to target during the mini-transformation
• Prepare line leaders and
5 Change agents bring “bursts” of change through redesign operators to sustain the
of the operating and management systems, and creating change
experiences and skills to create the performance culture

6 Sustainable performance improvement requires the line

owning and sustaining this “new way of life” long after the
initial 16-week “burst” of change (the mini-transformation)
Smurfit-Stone Container * Operational Excellence Boot Camp 68
SENIOR MANAGEMENT NEEDS TO PLAY AN ACTIVE AND VISIBLE ROLE
IN A TRANSFORMATION
Not only . . .

Discussion of concepts Weekly progress reviews Visits to shop floor

. . . but also

Practical training Active participation Understanding root causes

Smurfit-Stone Container * Operational Excellence Boot Camp 69

EVERYONE MUST LIVE THROUGH A TRANSFORMATION – TO BE TRULY
CONVINCED OF THE BENEFITS OF THE NEW WAYS
Why can’t you learn to ride a bike
by just buying one and reading a
book?
• There is more to riding a bike than just
following a set of instructions
• Riding a bike depends on going beyond
knowledge or theory and being able to
integrate a set of activities and
capabilities
• Riding a bike safely and successfully
depends on dealing with changes in
terrain and unexpected events
• There comes a moment when
everything clicks and the whole thing
comes together
Smurfit-Stone Container * Operational Excellence Boot Camp
Why do we have to go through an
end-to-end transformation
to understand it?
• There is more to it than just following a
set of instructions
• A transformation depends on
successfully integrating operating
systems, management systems,
mindsets and capabilities (not just
understanding each one in theory)
• A transformation path can be planned
to some extent, but it is more like a
journey than a definable process
• People implementing lean typically
experience a moment when “the light
comes on,” and what was previously
neither intuitive nor obvious suddenly
makes sense
70
SUCCESSFUL TRANSFORMATIONS . . .

. . . address both performance and

health to deliver impact and build
capability

. . . stretch aspirations with an

inspiring view of the future state

. . . are journeys individual to

each management team

. . . are rooted in frontline changes and

are physically apparent

. . . make the change personal to

embed the new behaviors

. . . align and upgrade leadership

capability, so that change is led
through the line
Smurfit-Stone Container * Operational Excellence Boot Camp 71
Operating system – OPX elements

Smurfit-Stone Container * Operational Excellence Boot Camp 72

A HIGH-LEVEL PLANT ASSESSMENT AIDS IMPROVEMENT ACTION
PRIORITIZATION
Introduction

MIFA • Material and Information Flow Analysis (MIFA) depicts all the actions required to
bring a product through the flow from raw materials to the customer
• A MIFA is a one page, end to end overview of the entire operations, opportunities
and bottlenecks
• Creating a MIFA forces you look at the big picture, not just the individual
processes or tasks. The goal is to optimize the whole, not the individual
components
• Information gathered to create the MIFA should be obtained first-hand, and
directly from observations the shop floor
OEE
• Overall Equipment Effectiveness (OEE) is a measure to evaluate the
productiveness of a machine or a production line
• The higher the OEE, the more good product per shift a machine or line produces
• OEE analysis is a tool used to analyze equipment performance, and should be
used in support of business objectives where there is a clear need
– Bottlenecks (machine or process) which constrain the capacity of a value stream
to meet customer needs
– High capital cost equipment where utilization must be raised to reduce asset
size
Smurfit-Stone Container * Operational Excellence Boot Camp 73
THERE ARE 6 STEPS TO CREATING A CURRENT STATE MIFA

1. Define Customer Requirements

2. Draw Process Steps
3. Gather Process Data
4. Gather Inventory Data
5. Determine External Material flow
6. Determine Information flow

Smurfit-Stone Container * Operational Excellence Boot Camp 74

Source: McKinsey
STEP 1: DEFINE CUSTOMER REQUIREMENTS EXAMPLE

Material and Information Flow (MIFA)

Production scheduling Customer service

Daily orders ~ week in advance
Orders 1x/week Orders daily
Supplier Customers

2-4 week Customer lead-time ~ 3-5 days

lead-time

Key Points:
• Draw in customer(s)

• Identify customer lead time(s)

• Draw in company and relevant departments for information flow

• Draw in main supplier(s)

• Identify supplier lead time(s)

• Draw information flows between departments

Smurfit-Stone Container * Operational Excellence Boot Camp 75

Source: Team analysis
STEP 2: DRAW PROCESS STEPS EXAMPLE

Material and Information Flow (MIFA)

Production scheduling Customer service

Daily orders ~ week in advance
Orders 1x/week Orders daily
Supplier Customers

2-4 week Customer lead-time ~ 3-5 days

lead-time Ward RDC

Big Staley

Corrugator 38 Saturn Bander

50 Saturn
Key Points:
• A Process is NOT the same as a
50 Kop
department or function
• A process is an activity where material can
stagnate either side
FLX 66
• Parallel processes are to be drawn above
each other-- although, this may not always
be possible (e.g. when there are 6
converting machines)

Smurfit-Stone Container * Operational Excellence Boot Camp 76

Source: Team analysis
STEP 3: GATHER PROCESS DATA KEY
EXAMPLE
-/-/- = FTE/Shift
Output = MMSF/mth
Material and Information Flow (MIFA) OEE*= % scheduled
Lf/hr = Feet per hour
K/hr = kicks per hour
Production scheduling Customer service
Daily orders ~ week in advance
Orders 1x/week Orders daily
Supplier Customers

2-4 week Ward RDC Customer lead-time ~ 3-5 days

lead-time
3/3/3
• Converting is current
Speed bottleneck, given corrugator
Output==215
h
Key Points: 21% OEE = 21% has capacity to generate
external sheet work
K/hr = 1,900
• Number of operators • Converting improvements
will shift bottleneck to the
per shift corrugator
Big Staley
• Output
2/2/2
• OEE
11% Speed
Output==8
2h
Corrugator OEE = 14% 38 Saturn Bander
• Kicks per hour K/hr =1,223 2/2/2
6/4/4 1/1/1
• Use callouts to Speed
Output==271
h Speed
Output= =2 12
h Speed
Output= =2 71
h
highlight key OEE = 58% 17% 50 Saturn OEE = 16% OEE =28%
K/hr = 2,462
observations LF/hr = 23,618
3/3/3

Speed = 2 h
23% Output =16 50 Kop
OEE = 19%
Corrugator capacity is greater K/hr = 2,252 2/2/2
• Bander is not a bottleneck
than converting, however
Speed
Output= =2 10
h • Improvement opportunity
excess capacity is filled by
OEE = 15% with steady operations and
sheet work 14% improved staging
FLX 66 K/hr = 1,783
-/2/-
Sheet Output
3% Speed
Output==22h ~ 8 MMSF
OEE = 7%
K/hr = 596 11%

Source: Team analysis, client productivity data (Sept 2006). *Based on 80% OEM for converting, FI targets for corrugator and machine measured cycletime for the
Bander
STEP 4: GATHER INVENTORY DATA KEY
EXAMPLE
-/-/- = FTE/Shift
Output = MMSF/mth
Material and Information Flow (MIFA) OEE*= % scheduled
Lf/hr = Feet per hour
K/hr = kicks per hour
Production scheduling Customer service
Daily orders ~ week in advance
Orders 1x/week Orders daily
Supplier Customers

2-4 week Ward RDC Customer lead-time ~ 3-5 days

lead-time
3/3/3
• Converting is current
Key Points: Speed
Output==215
h bottleneck, given corrugator
21% OEE = 21% has capacity to generate
• use a triangle if inventory is not K/hr = 1,900
•
external sheet work
Converting improvements
controlled will shift bottleneck to the
corrugator
• use a separate triangle for each Big Staley
location, indicate a snapshot of total 2/2/2
units stored
11% Speed
Output==8
2h
Corrugator OEE = 14% 38 Saturn Bander
K/hr =1,223 2/2/2
~30-40 6/4/4 1/1/1 <2/3 day
days Speed
Speed
Output==271
h Output= =2 12
h Speed
Output= =2 71
h
OEE = 58% 17% 50 Saturn OEE = 16% OEE =28%
LF/hr = 23,618 K/hr = 2,462
2/3 day 3/3/3

Speed = 2 h
23% Output =16 50 Kop
OEE = 19%
Corrugator capacity is greater K/hr = 2,252 2/2/2
• Bander is not a bottleneck
than converting, however 0 day
Speed
Output= =2 10
h • Improvement opportunity
excess capacity is filled by
OEE = 15% with steady operations and
sheet work 14% improved staging
FLX 66 K/hr = 1,783
-/2/-
Sheet Output
3% Speed
Output==22h ~ 8 MMSF
OEE = 7%
K/hr = 596 11%

Source: Team analysis, client productivity data (Sept 2006). *Based on 80% OEM for converting, FI targets for corrugator and machine measured cycletime for the
Bander
STEP 5: DETERMINE EXTERNAL MATERIAL FLOW KEY
EXAMPLE
-/-/- = FTE/Shift
Output = MMSF/mth
Material and Information Flow (MIFA) OEE*= % scheduled
Lf/hr = Feet per hour
K/hr = kicks per hour
Production scheduling Customer service
Daily orders ~ week in advance
Orders 1x/week Orders daily
Supplier Customers

Daily production
Ward RDC Customer lead-time ~ 3-5 days
Schedules to plant
and daily variances
3/3/3
back from plant • Converting is current
2-4 week
Speed bottleneck, given corrugator
lead-time Output==215
h
21% OEE = 21% has capacity to generate
external sheet work
K/hr = 1,900
• Converting improvements
will shift bottleneck to the
corrugator
1x/week Big Staley ~25/day
2/2/2

11% Speed
Output==8
2h
Corrugator OEE = 14% 38 Saturn Bander
K/hr =1,223 2/2/2
~30-40 6/4/4 1/1/1 <2/3 day
days Speed
Speed
Output==271
h Output= =2 12
h Speed
Output= =2 71
h
OEE = 58% 17% 50 Saturn OEE = 16% OEE =28%
LF/hr = 23,618 K/hr = 2,462
Key Points: 2/3 day 3/3/3

• draw deliveries from Speed = 2 h

23% Output =16 50 Kop
OEE = 19%
supplier and to customer K/hr = 2,252 2/2/2
Corrugator capacity is greater 0 day
Speed
Output= =2 10
h • Bander is not a bottleneck
• Typical information:
than converting, however
14%
OEE = 15% • Improvement opportunity
excess capacity is filled by
– Shipment
sheet work
method FLX 66 K/hr = 1,783 with steady operations and
improved staging
– Shipment frequencies -/2/-
Sheet Output
3% Speed
Output==22h ~ 8 MMSF
OEE = 7%
K/hr = 596 11%

Source: Team analysis, client productivity data (Sept 2006). *Based on 80% OEM for converting, FI targets for corrugator and machine measured cycletime for the
Bander
STEP 6: DETERMINE INFORMATION FLOW KEY
EXAMPLE
-/-/- = FTE/Shift
Output = MMSF/mth
Material and Information Flow (MIFA) OEE*= % scheduled
Lf/hr = Feet per hour
K/hr = kicks per hour
Production scheduling Customer service
Daily orders ~ week in advance
Orders 1x/week Orders daily
Supplier Customers

Daily production Customer lead-time ~ 3-5 days

Schedules to plant Ward RDC
and daily variances
3/3/3
2-4 week
back from plant • Converting is current
Speed bottleneck, given corrugator
lead-time Output==215
h
21% OEE = 21% has capacity to generate
external sheet work
K/hr = 1,900
• Converting improvements
will shift bottleneck to the
corrugator
1x/week Big Staley ~25/day
2/2/2

11% Speed
Output==8
2h
Corrugator OEE = 14% 38 Saturn Bander
K/hr =1,223 2/2/2
~30-40 6/4/4 1/1/1 <2/3 day
days Speed
Speed
Output==271
h Output= =2 12
h Speed
Output= =2 71
h
OEE = 58% 17% 50 Saturn OEE = 16% OEE =28%
LF/hr = 23,618 K/hr = 2,462
Key Points: 2/3 day 3/3/3

• Identify how information Speed = 2 h

23% Output =16 50 Kop
OEE = 19%
flows between K/hr = 2,252 2/2/2
Corrugator capacity is greater
processes • Bander is not a bottleneck
than converting, however 0 day
Speed
Output= =2 10
h • Improvement opportunity
excess capacity is filled by
OEE = 15% with steady operations and
sheet work 14%
• Identify types and FLX 66 K/hr = 1,783 improved staging

frequency of scheduling -/2/-

Sheet Output
3% Speed
Output==22h ~ 8 MMSF
OEE = 7%
K/hr = 596 11%
Inwards goods Corrugating Converting Shipping
Source: Team analysis, client productivity data (Sept 2006). *Based on 80% OEM for converting, FI targets for corrugator and machine measured cycletime
for the Bander
OEE FACTORS

OEE is derived from 3 factors:

OEE = Availability rate X Performance rate X Quality rate

Availability rate Performance rate Quality rate

How much time per shift How well did the machine How many products were
was the machine actually perform (compared to the good the first time?
running? rated speed) when it was
actually running?

Smurfit-Stone Container * Operational Excellence Boot Camp 81

6 BIG LOSSES OF MACHINE TIME

The 3 primary factors of OEE are typically influenced by “6 big losses”

1 Breakdowns
Availability rate Downtime losses
2 Setups

3 Minor stops
Performance rate Speed losses
4 Speed loss

5 Scrap
Quality rate Quality losses
6 Rework

Smurfit-Stone Container * Operational Excellence Boot Camp 82

ANALYSIS OF THE 6 BIG LOSSES – AVAILABILITY
Time losses for breakdowns and setups need to be understood to improve the
availability rate
Breakdowns:
• Lost time due to machine failure
• Loss measured by operator/
maintenance tracking system
Setups:
• Time interval between last good
part from prior run to first good
part from new run with machine
operating at rated speed
• Measured by operator
downtime tracking or time study
Smurfit-Stone Container * Operational Excellence Boot Camp
Examples
• Transfer of product is not possible due to broken
conveyor or faulty automation
• Machine is shut off because of failures
• Equipment stopped because operator is missing
Examples
• Fixtures and/or material types need to be changed
because of different product (product change)
• Equipment fixtures/tools need to be changed (tool
change)
• Periodic tests must be performed for product quality
or process capability
83
ANALYSIS OF THE 6 BIG LOSSES – PERFORMANCE

Time losses for idling and minor stoppages as well as speed losses need to be
understood to improve the performance rate

Examples:
Minor stops:
• Downstream equipment is idle because product
• Lost time due to unplanned
supply from previous process is insufficient
stoppages other than
• Operators pause to “tweak” equipment (e.g., label
breakdown or setup
dispenser needs a minor fix or reloading; normal
• Measured through operator
work flow is interrupted)
tracking or calculated

Examples:
Speed Loss:
• Actual index time for an automated line is longer
• Lost time due to machine
than the ideal index time of 60 seconds (e.g.,
operating at slower speed than
produced 30 pieces in an hour when we should have
process design standard
been able to make 60 pieces in that period of time)

Smurfit-Stone Container * Operational Excellence Boot Camp 84

ANALYSIS OF THE 6 BIG LOSSES – QUALITY

Time losses for scrap and rework need to be understood to improve the quality rate

Examples:
Scrap:
• Production time lost producing • Products that are caught at the source and scrapped
unusable materials
• Materials that are lost in the process
– Yield losses
• Measured scrap then converted – Material leakage/salvage, etc.
to time loss
– Startup material loss

Examples:
Rework: • Product that is rejected at final inspection, or end of
• Production time lost from process checks, then reworked to an acceptable
defective parts rejected at end quality level
of line or afterwards
• Measure usually a reject log of
total parts lost then calculated
for lost time

Smurfit-Stone Container * Operational Excellence Boot Camp 85

OEE – HOW TO CALCULATE

Total Time
(i.e., 24 hours x 7 days)
Non working time
Total Working Time
(e.g. weekends)

Total Available Time Planned stops

(i.e., periodic scheduled maintenance)

Baseline, = 100% The 6 big losses reduce machine performance:

Operating Time Breakdown Availability = (available time) - (Downtime)

(available time)
(Downtime losses) Setup

Running Time Minor Stops Productivity* = (operating time) - (Speed losses)

(operating time)
(Speed losses) Speed Loss

Scrap Quality = (processed amount) - (Scrap+Rework)

Value-added (processed amount)
(Defect losses) Rework

Overall Equipment Effectiveness = Availability x Productivity x Quality

Smurfit-Stone Container * Operational Excellence Boot Camp 86

OEE ANALYSIS HELPS PRIORITIZE OPX OPPORTUNITY Improvement potential

Corrugating OEE
Percent of time Effort and timing of OPX
elements is phased based on
3 9
100
93 15
throughput potential
5 2
17
61
3 0
Key learning
58 • Develop OEE across all
machines in order to get
accurate perspective of
Available Break- Setups Oper- Minor Speed Running Scrap Rework Effective performance losses
time downs ating stops loss time time
time
• Not all improvement
potential may be required
Converting OEE
Percent of time* as only bottleneck
improvement will increase
13 4 8 throughput of plant
100 45
2
• Collect detailed OEE
information that can then
53 19
be used as data for
17 – Set-up analysis
17 16 – Minor stop reasons
1 0

Available Break- Setups Oper- Minor Speed Running Scrap Rework Effective
time downs ating stops loss time time
time

Smurfit-Stone Container * Operational Excellence Boot Camp 87

Source:Team analysis
OEE – breakout simulation

Smurfit-Stone Container * Operational Excellence Boot Camp 88

OEE BREAKOUT SIMULATION

• Learn to do a basic calculation of OEE

Purpose

1. Undertake simulation
Process • Use plant production data sheets to determine overall OEE
• Analyze minor stops data sheets to determine quantities of each major
OEE category
• Calculate category percentages
• Build OEE waterfall
2. Discuss with group results

• Completed OEE “waterfall” chart

End
products

Smurfit-Stone Container * Operational Excellence Boot Camp 89

OEE – success stories

Smurfit-Stone Container * Operational Excellence Boot Camp 90