Checking Progress On Your Lean Journey
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Checking Progress On Your Lean Journey

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Tim McMahon and Jeff Hajek discuss how to evaluate your ...

Tim McMahon and Jeff Hajek discuss how to evaluate your
Lean progress, and what you can do if you seem to be falling short. They will cover leadership, training systems, Lean tools, culture, infrastructure, and more.

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  • Full Name Full Name Comment goes here.
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  • Wow Tim, a great discussion we are having here. (And I thank you for that.:>) You last reply is a perfect example of the mentality that has kept TDC (True Downtime Cost) from catching on in our industry all these years. Reminds me of the challenges Lean had catching on in our US industry. I am one of the few who believe our computing power and monitoring technology have reached a point we can accurately calc and monitor TDC (IE: more cost metrics) The same you said about tracking cost savings/avoidance can be said about calculating and tracking OEE. But at the end of the day, both are just a benchmarks that's usefulness is only as good as its consistency in calculating and who's trustworthiness is only as good as the company's leadership/culture. The trust of metrics/KPI/benchmarks vary from facility to facility based on those two factors.
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  • Some Thoughts from Jeff Hajek:
    Dollars and cents is a great metric, if it is accurate and indisputable. It is a horrible metric if it is fluffy or if it is debatable. If a kaizen takes $27,308 in average inventory off a shelf, it saved money that can be directly traced (easily) to a working capital change. But if the same kaizen also freed up a person who joins a resource team, how much was actually saved? We know intuitively that it is a good thing, but unless something else happens, there is no savings. And that ‘something else’ likely also has a person wanting to track the financial impact. So, where does the money show up on the KPI?
    There is also the complication of the cumulative effect of many different factors on dollars, as well as the delay between activity and actual impact. And then you get into the debate about cost avoidance vs. hard saving. How do you address the dollar savings of floorspace when you own a building? Do you credit it with the cost of rent avoided, or just the cost of overhead, which in itself is an average/estimate?
    Finally, I once had a VP tell an audience that if all the cost changes he heard in kaizen report-outs were true, that it would be a billion dollar company with a 80% profit margin and 4 employees. He was a Lean zealot, but also understood the issue with reporting savings. But not all people are like him. If a metric is confusing or debatable, it is worse than having no metric at all. That is why I prefer something like # of kaizens vs trying to create a $ number that people won’t trust anyway.
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  • I hear you Tim, but think you missed my point. While there are people like you and me who have blind faith, or understand the logic behind Lean and/or seen the profitability in past Lean initiatives, my point is it is easier to keep the masses (all employees, exp and new, operator and excutive) on board if you have KPIs proving to those non-believers or those who would otherwise start to lose faith, the success of their Lean efforts. the same reasons we use OEE/TEEP, but dollars and cents will be a more universal and easier understood KPI for the layman or new to Lean program/facility. that is my point.

    I am not advocating assigning dollar value to every little aspect of plant wide/corporate wide Lean initiatives, just those areas where it is easily (even automatically) applied. (like with Kaizens savings, raw material usage savings, etc.) Hope this clarifies.
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  • Well, I am not sure everything good needs to be tracked financially. I have seen many a company try to do so but many improvements might not easily be found on the P&L. In the beginning large events might be but the goal is many many tiny activities daily. Those are likely harder to track.

    It has been my experience that those who truly understand the benefits of lean are not concerned with tracking the finance like that because they know it will come as a result of the improvements. That is typically why they apply this thinking. Those that want to tack cost savings are generally only looking at the result and not the process to achieve it. These executives are typically not aware of the power of lean thinking and have to substantiate it with cost savings.

    Again I say not everything good or worth doing is found on the P&L.
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  • Do you think if the metrics you mention in your powerpoint focused a little on dollars, success would be more likely? Like instead of or in addition to % of/ # of kaizen per year, the metric indicate $s saved per year with Kaizens? True Downtime Cost, etc. Money is the bottom line, Lean initiatives need more upfront ties to money (bottom line)
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  • Talking PointsWhy measure? Need to confirm that the actions you are taking are getting your where you want to go.Means several things: 1. Have to know where you started 2. Have to know where you want to end up 3. Have to know the lay of the land 4. Have to chart a course 5. Have to know where you are along the way 6. More important to check location relative to plan than to destination-Countermeasure to get back on trackChecking progress means comparing 3 and 4, and then taking action.Takeaways: Hard to tell where ‘There’ should be—top strategy Easy to tell if path was wrong, but hard to tell if it will be right (hindsight is 20/20)
  • Common way companies are measures is by big picture results—No distinction between how the world measures Lean and non-lean companies. It is about measuring business objectives. Lean affects the processes to Standard Metrics: Tier 1: Profit margin, sales, profit Tier 2: Quality metrics, Lead times, Customer satisfactionChallenges Industry dependent Wide disparity in progress Pockets of excellence (world class in one metric, average in another) Strategy dependent (i.e. margins for Nordstroms vs. Walmart)Have to link external evaluations to internal processes/Lean efforts Company: PD Department: KPIsBest indicator is progress—need to develop a trend to see if you are going in the right direction, and with enough speed
  • Process/systems focused metricsDrivers behind ‘big picture’ improvement Actionableeasily measurable understood by teamsKey: Direct link to processesTalk through animation Important thing is not absolute value—it is progress Won’t happen without also focusing on the drivers of CI efforts
  • Among most controversial-Leads to arguments among ‘Lean Zealots’Some recommend tracking Lean activities; others resistJeff’s Recommendation:Use as a secondary measure or as a countermeasure measurement, but audit to prevent gaming the metrics. Provides a good indicator when progress is slower than planned.
  • Have to follow up on projects to make sure tasks are accomplishedHow diligently teams follow-up on projects is a litmus test of Lean progress—Do they take initiative to make changes?Don’t just track the individual project follow-up. Look at how well projects are completed across the board.
  • Always have the tools for ‘normal’ jobCheck to see if the right tools are present, and that they are properly maintained

Checking Progress On Your Lean Journey Presentation Transcript

  • 1. Checking Progress On Your Lean Journey Presented by Jeff Hajek Tim McMahon Gotta Go Lean A Lean Journey© 2012 by Velaction Continuous Improvement, LLC and Tim McMahon. Version 5/20/2012All Rights Reserved.
  • 2. Are We There Yet? Here There© 2012 by Velaction Continuous Improvement, LLC and Tim McMahon. Image courtesy of Wikimedia CommonsAll Rights Reserved. http://commons.wikimedia.org/wiki/File:Maze.svg
  • 3. The Big Picture© 2012 by Velaction Continuous Improvement, LLC and Tim McMahon. Mural image courtesy of Wikimedia CommonsAll Rights Reserved. http://commons.wikimedia.org/wiki/File:Mural_Building_in_Albuquerque.JPG
  • 4. Lean (Process) Metrics • Productivity • Lead time • • Quality Inventory turns A • % “A/B” Parts on kanban • Response time for andons • Floor space • Ergonomics B Process Focused Metrics© 2012 by Velaction Continuous Improvement, LLC and Tim McMahon.All Rights Reserved.
  • 5. Lean Training & Participation Participation doesn’t equal results! • % of team receiving Lean training If you don’t • # of kaizen events participate, you definitely won’t get • % of team in kaizen within year results! • # of black belts© 2012 by Velaction Continuous Improvement, LLC and Tim McMahon. Image courtesy of Wikimedia CommonsAll Rights Reserved. http://commons.wikimedia.org/wiki/File:Mocking_Bird_Argument.jpg
  • 6. Leadership• Is there a clear vision / strategy?• Is there policy deployment (hoshin kanri)? Bottom Line:• Do leaders visit gemba (work areas) or live Are leaders there? “Walking the• Is there a daily management system?• Is there leader standard work? Talk”? Image courtesy of Wikimedia Commons© 2012 by Velaction Continuous Improvement, LLC and Tim McMahon. http://commons.wikimedia.org/wiki/File:Cavalry_cAll Rights Reserved. harge_by_the_Ottoman_army_in_the_Sinai.jpg
  • 7. Kaizen Measurement Follow-up provides HUGE “Tell” about commitment© 2012 by Velaction Continuous Improvement, LLC and Tim McMahon. Image courtesy of Wikimedia CommonsAll Rights Reserved. http://commons.wikimedia.org/wiki/File:Metre_pliant_500px.png
  • 8. Culture • Responses to problems / openness • ‘Kata’ behaviors • Degree of cross-training • Mentoring • Resource sharing • Turnover • Staffed for project time Image courtesy of Wikimedia Commons http://commons.wikimedia.org/wiki/File:MoveInHangetsuDachi.svg© 2012 by Velaction Continuous Improvement, LLC and Tim McMahon. http://commons.wikimedia.org/wiki/File:Shadow_Karate_Kick.jpgAll Rights Reserved.
  • 9. Infrastructures • Workshops • Meeting rooms • Tools / equipment / materials • Training materials Do teams have the right tools for the job? Image courtesy of Wikimedia Commons http://commons.wikimedia.org/wiki/File:Inside_the_Bender_Factory_-© 2012 by Velaction Continuous Improvement, LLC and Tim McMahon. _geograph.org.uk_-_1547827.jpgAll Rights Reserved.
  • 10. Conclusion • Regular audits / assessment – Track progress! – Countermeasure problems • Must have a course charted to do an assessment – Have to know where you are supposed to be – Don’t waste time with starting point until you know what the end point is.© 2012 by Velaction Continuous Improvement, LLC and Tim McMahon.All Rights Reserved.
  • 11. Follow-up Information• http://www.GottaGoLean.com http://www.ALeanJourney.com http://www.facebook.com/ALeanJourney @TimALeanJourney Form Library: Policy Deployment Matrix A Lean Journey LinkedIn Group© 2012 by Velaction Continuous Improvement, LLC and Tim McMahon.All Rights Reserved.
  • 12. Questions Jeff Hajek Info@Velaction.com www.GottaGoLean.com 1.800.670.5805 Tim McMahon Tim@ALeanJourney.com http://linkedin.com/in/timothyfmcmahon 860-HOW-LEAN (469-5326)© 2012 by Velaction Continuous Improvement, LLC and Tim McMahon.All Rights Reserved.
  • 13. Copyright Terms • You may modify this presentation for use within your own organization. • You may distribute this presentation within your own organization. • You may not distribute this presentation, its derivative works, or copyrighted images contained within it outside of your own organization.© 2012 by Velaction Continuous Improvement, LLC and Tim McMahon.All Rights Reserved.