Taking Lean to the Enterprise

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by Kent Sears of General Motors and John Shook of TWI Network shown at the Lean Service Summit on 23rd June 2004 ran by the Lean Enterprise Academy

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Taking Lean to the Enterprise

  1. 1. to the LeanLean Taking EnterpriseEnterprise
  2. 2. Kent Sears Vice President General Motors North America Manufacturing Processes and GMS Implementation Kent Sears Vice President General Motors North America Manufacturing Processes and GMS Implementation John Shook Senior Advisor Lean Enterprise Institute President TWI Network John Shook Senior Advisor Lean Enterprise Institute President TWI Network
  3. 3. Today’s PresentationToday’s Presentation History of Lean at GM Taking Lean to the Enterprise “Learning to See” Value Stream Mapping Nature of office work History of Lean at GM Taking Lean to the Enterprise “Learning to See” Value Stream Mapping Nature of office work
  4. 4. The Awakening…The Awakening… Feeling the competitive threat Toyota introduces something new GM and Toyota negotiate NUMMI joint venture – Toyota Production System – Manufacturing in the United States Feeling the competitive threat Toyota introduces something new GM and Toyota negotiate NUMMI joint venture – Toyota Production System – Manufacturing in the United States
  5. 5. “All GM plants“All GM plants are a part of the same companyare a part of the same company and must operate withand must operate with oneone production systemproduction system with common elements…run common, run lean”with common elements…run common, run lean” Jack Smith past GM Chairman
  6. 6. Lean HistoryLean History GM Global Manufacturing System Develop leadership Deliver superior business results Build value and reduce waste GM Global Manufacturing System Develop leadership Deliver superior business results Build value and reduce waste
  7. 7. Standardizatio n Standardizatio n People Involvement People Involvement Continuous Improvement Continuous Improvement Short Lead Time Short Lead Time Built-in Quality Built-in Quality 5 Principles5 Principles
  8. 8. Global Manufacturing SystemGlobal Manufacturing System LEAN thinking leadership Exceptional business results Sustained performance improvement Competition was not standing still! Fierce competitive pressures LEAN thinking leadership Exceptional business results Sustained performance improvement Competition was not standing still! Fierce competitive pressures
  9. 9. The ChallengeThe Challenge Leverage the learning Optimize the whole Leverage the learning Optimize the whole Accelerate performance Competitive challenge Accelerate performance Competitive challenge
  10. 10. Success with Lean in manufacturing was difficult and took a long time. Was taking GMS, GM’s Lean production system, from the plant to the office even possible? Success with Lean in manufacturing was difficult and took a long time. Was taking GMS, GM’s Lean production system, from the plant to the office even possible? Lean at General Motors: From the plant to the office Lean at General Motors: From the plant to the office
  11. 11. NUMMI: The Success Story: Lean Success with a UAW Workforce Agreement between Toyota and GM: Toyota manages the plant and implements the Toyota Production System Almost all former GM workers offered jobs: Including the old “troublemakers” Extensive training program: Over 600 employees sent to Japan for training Over 400 trainers sent from Japan to NUMMI About 30 managers or "coordinators" from Japan Results: Quality Equal to Takaoka Japan Productivity Close to Takaoka Japan
  12. 12. NUMMI: The Other Story What did the JV partners really get? The Business Agreement: Toyota manages the plant and implements the Toyota Production System The Business Case for GM: Small profitable car TPS Idle capacity – plant and people The Business Case for Toyota: ?? Results: GM ?? Toyota ??
  13. 13. The Toyota Production SystemThe Toyota Production System Just in TimeJust in Time “The right part“The right part at the right timeat the right time in the right amount”in the right amount” •Continuous Flow •Pull System •Takt Time Leveled ProductionLeveled Production JidokaJidoka Production LinesProduction Lines That Stop forThat Stop for AbnormalitiesAbnormalities •Automatic Machine Stop •Fixed Position Line Stop •Error Proofing •Visual Control •Labor-Machine Efficiency Standardized Work Robust Products and Processes Preventative Maintenance; 4S Supplier Involvement Best QualityBest Quality -- Lowest CostLowest Cost -- Shortest Lead TimeShortest Lead Time Through Shortening the Production Flow By Eliminating WasteThrough Shortening the Production Flow By Eliminating Waste “Built“Built--in Quality”in Quality” Operational Stability and KaizenOperational Stability and Kaizen
  14. 14. What could GM, or any company, do?? Toyota is Toyota. We can learn from them, but we can’t copy them exactly. How can we operationalize the same principles in our own organizations?
  15. 15. Lean Thinking Womack and Jones’ Five-Step Approach has been followed by many: 1. Find a change agent (how about you?) 2. Find a sensei (a teacher) 3. Seize or create a crisis 4. Map your value streams 5. Pick something and get started But, many skipped Step Four and jumped from Step Three to Step Five.
  16. 16. “Learning To See”“Learning To See”
  17. 17. VALUEVALUE--STREAM MAPPING:STREAM MAPPING: Welding Assembly Stamping •Draw a map of your current material and information flows •Draw a map of how your material and information should flow •Create and implement a plan to achieve your future state vision “Learning To See”
  18. 18. VALUEVALUE--STREAM IMPROVEMENTSTREAM IMPROVEMENT and PROCESS IMPROVEMENTand PROCESS IMPROVEMENT Raw Material PROCESS VALUE STREAM Finished Product PROCESSPROCESS Stamping Welding Assembly Cell • Order to Delivery • Concept to Launch • Life Cycle Maintenance and Service
  19. 19. CurrentCurrent--State MapState Map
  20. 20. What To Do?What To Do?What To Do? Reduce Lead Time!Reduce Lead Time! –– Get each process to produce only whatGet each process to produce only what the next process needs when it needs it.the next process needs when it needs it. –– Orchestrate (control, manage, regulate)Orchestrate (control, manage, regulate) operations to get ever closer to this ideal,operations to get ever closer to this ideal, ever shortening the lead time.ever shortening the lead time. ORDER CASH “All we’re trying to do is shorten the time line…” Taiichi Ohno
  21. 21. INDIVIDUAL EFFICIENCY vs.INDIVIDUAL EFFICIENCY vs. SYSTEM EFFICIENCYSYSTEM EFFICIENCY
  22. 22. Takt Time = 58 FutureFuture--State MapState Map <5d
  23. 23. The Work Plan and Implementation The Work PlanThe Work Plan and Implementationand Implementation Product Family Current- State Drawing Work Plan and Implementation Future-State Drawing A Detailed Plan of How to Get There •Step-by-step -- When, Who, How •Clear checkpoints with •real deadlines and •named reviewers •reviewable outcomes A Detailed Plan of How to Get There •Step-by-step -- When, Who, How •Clear checkpoints with •real deadlines and •named reviewers •reviewable outcomes
  24. 24. EXTENDED V.S. GOALS Person REVIEW V.S. OBJECTIVES (measurable) YEARLY TIMELINE In and PLANT and Charge OBJECTIVES ACTIVITIES 1 2 3 4 5 6 7 8 9 10 11 12 Value-Stream Value-Stream MANAGER DATE INITIALS Value-Stream Plan
  25. 25. PP--DD--CC--A CycleA Cycle ACTION CHECK PLAN DO GRASP the SITUATIONGRASP the SITUATION HYPOTHESIS TRY REFLECT ADJUST
  26. 26. Lean: From the “Gemba” to the OfficeLean: From the “Gemba” to the Office What’s so different, really, between the “Gemba” (the plant floor or the “real place”) and the office? The office is also a “Gemba”. How should we think about the Office Gemba? Let’s use the Value Stream Mapping tool. How? What’s so different, really, between the “Gemba” (the plant floor or the “real place”) and the office? The office is also a “Gemba”. How should we think about the Office Gemba? Let’s use the Value Stream Mapping tool. How?
  27. 27. Applying VSM to the Office Gemba -- What we knew Applying VSM to the Office Gemba -- What we knew Lean works everywhere we’ve tried it. Leadership will be key. Learning must be the focus. Lean works everywhere we’ve tried it. Leadership will be key. Learning must be the focus.
  28. 28. Applying VSM to the Office Gemba -- What we thought Applying VSM to the Office Gemba -- What we thought A workshop will be an effective process. If we provide good training and clear expectations, excellent GM people will deliver results. The specific benefits of the VSM tool are natural for the Office Gemba. A workshop will be an effective process. If we provide good training and clear expectations, excellent GM people will deliver results. The specific benefits of the VSM tool are natural for the Office Gemba.
  29. 29. Applying VSM to the Office Gemba -- Some initial bothersome questions Applying VSM to the Office Gemba -- Some initial bothersome questions Can we distinguish work (“material”) flow from information (“control information”) flow? Can we do system Kaizen as well as process or point Kaizen? What is “waste” in the Office Gemba? What about “creative” or “knowledge-based” work? How to think about the “core value stream”, the real work of the business, versus support processes? How to think about internal customers vs. external customers? Can we distinguish work (“material”) flow from information (“control information”) flow? Can we do system Kaizen as well as process or point Kaizen? What is “waste” in the Office Gemba? What about “creative” or “knowledge-based” work? How to think about the “core value stream”, the real work of the business, versus support processes? How to think about internal customers vs. external customers?
  30. 30. Lean FunctionsLean Functions Takt Time = 58 <5d What must your function do to help create the Future State?
  31. 31. “The aim of the Product Development process is the creation of Profitable Value Streams.” “The aim of the Product Development process is the creation of Profitable Value Streams.” Product Development as an example function… Product Development as anProduct Development as an example function…example function… -- Al Ward
  32. 32. In Overall Value Stream Terms… THE VALUE STREAM Define value from the perspective of the customer What the customer wants when he/she wants it Support Processes Support Processes Support Processes Support Processes Support Processes
  33. 33. Insurance Claim Processing Compile Folder with Docs Receiving: Open & Array Docs Verify Claim Calculate Amount & Address Print, Stuff & Mail Check Policy Holder’s Family Funeral Home FIFO FIFO FIFO 2 Min 5 Min 10 Min 1 Min 1 Min P/T = L/T = # inputs = Reliability = P/T = L/T = %C&A = # ops = P/T = L/T = % rejects = Reliability = P/T = L/T = % rework = # ops = P/T = L/T = Reliability = % errors = 7 Days7 Days7 Days7 Days FIFO 28 Days 19 Min email mail manualfinan Process Box Process Data Box Inbox Queue Customer/ Supplier Technology Used Work Priority: FIFO System Metric Information System Output
  34. 34. Getting StartedGetting Started Communicating the vision Leadership buy-in Mapping the flow of value Let’s go big! Communicating the vision Leadership buy-in Mapping the flow of value Let’s go big!
  35. 35. Roll Out Process:Roll Out Process: Shared vision Leadership engagement Dedicated resource Clear objective Simple metrics Detailed strategy Individual accountability Monitoring and follow up Shared vision Leadership engagement Dedicated resource Clear objective Simple metrics Detailed strategy Individual accountability Monitoring and follow up
  36. 36. Shared VisionShared Vision Lean principles apply equally well in the office and on the factory floor Using lean thinking to optimize the enterprise Lean principles apply equally well in the office and on the factory floor Using lean thinking to optimize the enterprise
  37. 37. Leadership EngagementLeadership Engagement “Top 50” leadership meeting – Dr. James P. Womack Extensive debate “All in” consensus Taking LEAN to the enterprise “Top 50” leadership meeting – Dr. James P. Womack Extensive debate “All in” consensus Taking LEAN to the enterprise
  38. 38. Dedicated ResourceDedicated Resource Candidate selection Selection process – High potential list – North American Strategy Board approval GMS Functional Implementation Leader – 13 executives assigned Candidate selection Selection process – High potential list – North American Strategy Board approval GMS Functional Implementation Leader – 13 executives assigned
  39. 39. Dedicated ResourceDedicated Resource 13 Functional Implementation Leaders13 Functional Implementation Leaders – Planning – Quality – Purchasing – Human Resources – Information Systems – Legal – Finance – Planning – Quality – Purchasing – Human Resources – Information Systems – Legal – Finance – Design – Vehicle Engineering – Powertrain Engineering – Manufacturing Engineering – Manufacturing – Vehicle Sales, Service, and Marketing – Design – Vehicle Engineering – Powertrain Engineering – Manufacturing Engineering – Manufacturing – Vehicle Sales, Service, and Marketing
  40. 40. Dedicated ResourceDedicated Resource Training – Lean principles – “Learning to See” Value Stream Mapping – Facilitation and coaching training – Workshop mentoring Training – Lean principles – “Learning to See” Value Stream Mapping – Facilitation and coaching training – Workshop mentoring
  41. 41. Roles and ResponsibilitiesRoles and Responsibilities Leadership development – Leadership matrix Deliver results – Manage the process – Coach and support Leadership development – Leadership matrix Deliver results – Manage the process – Coach and support
  42. 42. Clear ObjectiveClear Objective Confirm our original hypothesis – “Lean Applies Everywhere” Not just a philosophical exercise Urgency and context $1 Billion/year Structural Cost Improvement Confirm our original hypothesis – “Lean Applies Everywhere” Not just a philosophical exercise Urgency and context $1 Billion/year Structural Cost Improvement
  43. 43. Simple MetricsSimple Metrics Leadership matrix $$$ of structural cost saving confirmed Leadership matrix $$$ of structural cost saving confirmed
  44. 44. Detailed StrategyDetailed Strategy Needed a NEW approach Not just: – Belt tightening – Head count reduction Lean Principles and Value Stream Mapping Hidden processes Optimize the Enterprise value streams Needed a NEW approach Not just: – Belt tightening – Head count reduction Lean Principles and Value Stream Mapping Hidden processes Optimize the Enterprise value streams
  45. 45. The New Way: Lean ApproachThe New Way: Lean Approach Planning R&D Financial HR WWP Labor Relations IS & S Legal Communications DesignDesign EngEng MfgMfgEngEng SellSell ActAct PlanPlan DoDo CheckCheck Product Plan Product Plan Customer Dealer Customer Dealer Leadership Board Leadership Board
  46. 46. ScopingScoping Project sponsor Process owner Project purpose statement Metrics Customer and customer requirements Process data set Workshop participants Leadership panel Project sponsor Process owner Project purpose statement Metrics Customer and customer requirements Process data set Workshop participants Leadership panel
  47. 47. Conducting the WorkshopConducting the Workshop Participant training Current state map Waste and root cause identification Applying lean principles Future state map Leadership review Implementation planning Leadership panel approval Participant training Current state map Waste and root cause identification Applying lean principles Future state map Leadership review Implementation planning Leadership panel approval
  48. 48. Enablers for SuccessEnablers for Success Leadership engagement Business objective Project scope Workshop participants Quantifiable metrics Bold moves Implementation planning Bottom line results Leadership engagement Business objective Project scope Workshop participants Quantifiable metrics Bold moves Implementation planning Bottom line results
  49. 49. Value Stream Mapping StatusValue Stream Mapping Status Lean-VSM Training 4000 Workshops 200 Workshop participants 3500 Hundreds of $Millions Saved $$$ Lean-VSM Training 4000 Workshops 200 Workshop participants 3500 Hundreds of $Millions Saved $$$
  50. 50. How it went…How it went… The EVSM Workshops were successful. They were not easy: - not easy to map the Current State - not easy to map the Future State - not easy to get enough learning in the right people quickly enough The project to apply Lean (GMS) to the enterprise was successful by any measure. The EVSM Workshops were successful. They were not easy: - not easy to map the Current State - not easy to map the Future State - not easy to get enough learning in the right people quickly enough The project to apply Lean (GMS) to the enterprise was successful by any measure.
  51. 51. The Nature of Office Work The Nature of Office Work
  52. 52. The Nature of Office WorkThe Nature of Office Work Value is always assumed: Question the value of everything! Value is always assumed: Question the value of everything!
  53. 53. The Nature of Office WorkThe Nature of Office Work Office processes are not visible All process steps are not comprehended Business processes rarely operate as expected Mapping exposes the hidden process Office processes are not visible All process steps are not comprehended Business processes rarely operate as expected Mapping exposes the hidden process
  54. 54. The Nature of Office WorkThe Nature of Office Work Standardized work is the fundamental building block of lean There are two types of work in the office: Creative and Transactional Contrary to popular belief the majority of is transactional Even the creative process can be standardized Standardized work has wide application Standardized work is the fundamental building block of lean There are two types of work in the office: Creative and Transactional Contrary to popular belief the majority of is transactional Even the creative process can be standardized Standardized work has wide application
  55. 55. The Nature of Office WorkThe Nature of Office Work Are the customer requirements understood? Are they detailed and specific? Unfortunately, in the office this is not the case First time quality is extremely low (5-15%) Built-in-Quality is the key Are the customer requirements understood? Are they detailed and specific? Unfortunately, in the office this is not the case First time quality is extremely low (5-15%) BuiltBuilt--inin--Quality is the keyQuality is the key
  56. 56. The Nature of Office WorkThe Nature of Office Work What constitutes inventory in the office? Primary value streams generally lack ownership Process flow breaks down at the functional intersection There are few formal tools to manage this discontinuity Lean material flow strategies can help What constitutes inventory in the office? Primary value streams generally lack ownership Process flow breaks down at the functional intersection There are few formal tools to manage this discontinuity Lean material flow strategies can help
  57. 57. The Nature of Office WorkThe Nature of Office Work Performance metrics are not widely used Process out-puts may be measured Effectiveness and efficiency are not! Waste reduction opportunity is consistently greater than Performance metrics are not widely used Process out-puts may be measured Effectiveness and efficiency are not! Waste reduction opportunity is consistently greater than 40%
  58. 58. Consider the Notion…Consider the Notion… If nearly half of what we do in the office is non-value added waste why would our organization allow it to exist? If nearly half of what we do in the office is non-value added waste why would our organization allow it to exist?
  59. 59. EVSM at GM -- Reflections EVSM at GM -- Reflections Value Stream Mapping proved to be even more powerful in the office than it is in the factory. But, the real key to the project success was the leadership provided by GM senior management. Value Stream Mapping proved to be even more powerful in the office than it is in the factory. But, the real key to the project success was the leadership provided by GM senior management.

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