FATHERLY ADVICE

When my daughter graduated from high school, and headed to college, I thought it apropos to give her some “unsolicited advice.” Now, many years later, she still has this short document laminated on her frig! So, I thought I would share it with you…

• Select a career that is satisfying and fun, almost like a hobby, not just a lucrative job that provides material wants, and be passionate about your work

Select a mate that has similar goals, personality and interests as you – no matter how long it takes to find that person – and don’t expect someone else to be in charge of your happiness

• Place 10% of EVERY paycheck in the bank for retirement, separate from savings – don’t touch it under any circumstances

• Spend more time listening than talking – you don’t learn anything from talking

• Make your friendships 60/40 – you give the 60%

• Create a balance in your life – often blending or sharing interests and hobbies that are quite different from your day-to-day lifestyle

• Nurture the network of contacts, friends and acquaintances with a sincere dedication and ability to reciprocate

• Coach, teach and offer assistance to those who you might influence, much as mentors have helped you

• Don’t worry about things or people’s behavior that you cannot control – you can only make a difference where you have control

• Embrace risk-taking…only a person who risks is free

Nothing is worth ruining your reputation – you develop just one

• Do what you love, do it with people you love, do it WELL!

LEAN SYSTEMS

The purpose of LEAN is ultimately to increase profitability.  The objectives are focused on two essential tenants:  productivity improvement and cost reduction, gained through the systematic elimination of waste.  LEAN is a philosophy and way of thinking that applies specific tools and methods in a consistent, well-disciplined and systematic manner.  It is a people system, involving both technologies and performance behavior, and therefore LEAN tools and techniques can be applied with equal effectiveness in manufacturing and office environments, focusing on key business processes.

This attention to key business processes will enable that business to gain profitability through increased market share and the capability to retain existing customer bases.  Regardless of your business type, customers today want product faster, free from defects and delivery delays, at the lowest possible price, and with dependable service after the sale.  In fact, there is a five times greater chance of losing a customer from poor service than from bad products.  According to James Womack, Lean Thinking, there are six principles that drive the LEAN culture:

(1). Customer defined VALUE
(2). Identify the VALUE STREAM
(3). Make it FLOW
(4). PULL it through the Process
(5). Continuous waste ELIMINATION
(6). Create PERFECTION

The foundation of modern Lean principles originated with the work of Taichi Ohno, and the systematic approach to waste elimination.  Today, that standard is the Toyota Production System (TPS); a set of manufacturing techniques to increase profits through the continuous elimination of waste.  The successful implementation of Lean across the entire business enterprise, must involve both the manufacturing and non-manufacturing areas, to fully maximize the benefits of short-term savings and sustained improvement.

As we institutionalize these activities, we have created a business culture whereby each employee has ownership and accountability in the entire process, and one which reflects “the way we do things here!”

LEAN in the Manufacturing Area:

Whether your business is discrete or continuous flow manufacturing, the techniques of LEAN waste elimination always include elements of People, Quality, Delivery and Cost.

It is truly a philosophy, and involves the application of specific and pragmatic tools in a consistent, systematic and measurable manner.  Typical examples of tools used are:

People: Workplace organization, Kaizen, Standard work, Visual systems
Quality: Prevention, Error-proofing, Early warning, Detection
Delivery: Just-In-Time, Kanban, Quick set-up, Leveling
Cost: Units, Money, Time, Customer satisfaction

We typically discuss these elements in everyday Operations dialogue that describe fixing defects, over-production, excessive motion and/or waiting, high inventory, long cycle time, lack of sound maintenance, or poor forecasting/production control.  Many LEAN implementation opportunities reside, as difficult as it is to admit, with simple communication, organizational and program management deficiencies.

LEAN in the Non-Manufacturing Area:

As previously mentioned, waste elimination in support or administrative functions is critical, but often overlooked, or deemed inappropriate to LEAN techniques.  Typical waste will include elements of People, Processes, and Information.  Effective LEAN applications in office or “back room” environments involve activities such as:

People: Work alignment, Ownership, Inefficiencies, Structured cells
Processes: Redundancies, Standardization, Poor flows, Sub-optimization
Information: Inaccuracies, Hand-offs, Incompletes, Technologies
Cost: Morale, Money, Time, Customer satisfaction

Similarly, daily problems occur here with poor communication or coordination, delays, translation/interpretation errors, or poor worker productivity as a result of several of these factors.  The ultimate loss will be the customer; whether it is the primary or secondary, direct or indirect, external or internal or the final consumer.  If you bundle this situation with the fact that basic business economics have changed; i.e. where cost plus profit once gave the price, now market price minus producer-controlled cost equals profit, waste elimination through LEAN implementation must be the given!

The fabric of LEAN implementation is the creation of a LEAN culture.  That involves the systematic changing of worker behavior in a never-ending process resulting in several achievements, including the following:

  • People recognize continuous improvement as part of their job
  • Work is cross-functional, in a systematic and collaborative manner
  • Focus is on the process to make changes
  • Management rewards good work and corrected mistakes
  • Team and workforce skills are developed
  • Mutual trust and respect is displayed

LEAN IMPLEMENTATION           

All successful LEAN implementations, manufacturing or non-manufacturing, include a structure of basic components.  Even prior to initiating the project itself, fundamental consensus agreement is essential to provide a unified and synergistic effort.  Success criteria and expectations are necessary fundamentals.

Success Criteria – Meeting Primary Business Goals and Objectives

A prerequisite for successful implementation is for the company to plan sufficient time, resources, and support for the proposed actions and important follow-up.  As clear evidence of improvement becomes apparent, top management must integrate the change initiative into the company’s overall business plan to demonstrate that all activities and efforts of LEAN are essential to the core business, and they are key enabling strategies critical to the success of the business.  SEE ATTACHMENT

Expected Results – Providing Systemic Resolutions and Improvements

Realizing that significant, dedicated resources will be invested throughout the LEAN implementation process, several key measurements will be established, with baselines and target goals, to determine the progress of the initiative and ascertain both short-term and annualized savings and accountabilities.  Action plans, task priorities and work schedules are created, with project “report-outs” and “checkpoints” established.  Some typical examples of expected improvements are:

  • Productivity
  • Inventory
  • On-time delivery
  • First-pass success rate
  • Process capability/yield
  • Rejects and scrap
  • Cycle-time
  • Cost structure
  • Throughput
  • Logistics
  • Components of Utilization
  • Value added per worker

The following example of client engagements and project descriptions further demonstrate the benefit potential of sound LEAN manufacturing implementation in both discrete and processing environments.  Project savings are noted; cost to client is very much dependent on the resources required vs. anticipated needs, and the strength and availability of client resources.

PETERSON ADVISORS GROUP Approach:

Phase I – Assessments, Education, and Metrics

  • Management and employee education and understanding
  • Determine customer needs and current business/competitive status
  • Conduct business operations assessment – current vs. desired state
  • Map product/service flow and identify opportunities
  • Establish baseline metrics/performance targets

Phase II – Application of LEAN techniques in Production

  • Apply 5 S’s plant-wide and conduct rapid improvement event(s)
  • Organize LEAN teams, leaders and work schedules
  • Formulate workplace organization in selected areas
  • Install visual systems
  • Flow value across selected production line and consolidate

Phase III – LEAN expanded in Production and Initiated in Support

  • Baseline check vs. improvement metrics
  • Establish/monitor equipment effectiveness metrics
  • Implement support methodologies
  • Transition to self-managed work teams
  • Institutionalize

Phase IV – Link with Suppliers, Customers, Shared Services (Enterprise)

  • Interface with I.T. and general information systems
  • Develop supplier capabilities
  • Elevate customer focus and advocacy
  • Enhance people systems
  • Finalize implementation model and relevant audit system

NEXT CONTINUOUS IMPROVEMENT GOAL:

Fully integrating the Supply/Value Chain to maximize Operational Efficiency and Customer Effectiveness.  By incorporating the voice of the customer and supplier is the critical enabler of integrated supply chain strategy.  The value chain is defined as:

  • system of organizations, assets and activities
  • cycle of “cradle to grave”
  • identifying, creating and delivering value
  • both product and service applications

“…first and foremost, the performance of the whole value stream is the only issue of relevance to the customer.”  James Womack, Lean Thinking

Mid-size Manufacturing Company Saves Millions Implementing LEAN Manufacturing Techniques

Recently, a mid-size manufacturer of industrial equipment, with sales of $125 million,  completed a successful implementation of LEAN systems involving  three plant locations.  An operation performance assessment was conducted, and aligned with the client’s success criteria.  Several cost reduction priorities were established and became the foundation of the LEAN implementation activity and subsequent project savings:

LEAN Initiative Savings
Inventory $7 million reduction in raw materials and finished goods
Productivity 12.5% improvement
Capacity Utilization 20% free capacity for new products
Logistics $1.3 million of recurring savings
Throughput 22% improvement in yield
Materials $750,000 in first six months, $2.2 million booked for next three years

The entire LEAN Enterprise implementation covered 15 months.  Additional benefits were realized in run rate efficiency, headcount reduction, product delivery and resource allocation.  Nearly 60% of the project savings were in the non-manufacturing (support) areas.  Although the results can be dramatic, the application of the specific techniques, sensible use of resources, and adherence to the structured approach are critical.  So, what is LEAN, why is it important to your business, and how do you “make it happen?”

The ever-changing business climate is placing additional demands on companies in most industries today.  As customer expectations increase, the resources needed to meet those expectations often are stretched.  To answer these challenges, many companies today are employing the proven techniques of LEAN systems.