What is Process Excellence? Tools – Support the Principles The PE Strategy is to enable every J&J business leader to adopt, use and engrain these Business Management Principles in their organizations Role of Leadership Customer Focus Process Mgt. & High Perf. Environment Fact-Based Mgt. & Evaluation Improvement & Innovation Continuous Assessment & Renewal Dashboards Improvement Methodologies Business Assessment Best Practices
Design Excellence Methodology used to develop products and/or processes that consistently meet customer requirements.
Based on Six Sigma Approach
Execute with Excellence Do it right first
Six Sigma Methodology used to attack process variability in order to eliminate defects
Use data to solve problems
Six Sigma Improvement Cycle NEXT PROBLEM DATA DRIVEN SOLUTION PRACTICAL SOLUTION PRACTICAL PROBLEM DATA BASED PROBLEM
Six Sigma DMAI 2 C Improvement Methodology 1 DEFINE 2 MEASURE 3 ANALYZE 4 INNOVATE IMPROVE 5 CONTROL Project SIPOC VOC Data Sampling Gage R&R Patterns Capability Process Analysis Multi-Vari Organize Causes Hypothesis Testing Regression DoE Solutions FMEA Pilot Implement- ation Closure Evaluate Monitor Document Standardize Control D efine M easure A nalyze I nnovate I mprove C ontrol
Six Sigma – D MA I 2 C - Statistical Analysis Demand variability weeks # 1, 2, 3, 4, 5 Calculation : Z (2.054 at 98 %CI) * σ Dem. Var. = 2.054 * 21 493 = 44 147 Demand variability weeks # 2, 3 Dem. Var. = 2.054 * 7 795 = 16 011 P-Value- 0.000 D M A I 2 C
Lean Thinking Methodology used to transform large scale complex processes to deliver customer value faster, improve work flow and eliminate waste
Road map (4 steps)
Analyze / Plan
Tools for key processes
New Products Development
Lean Thinking relies on 7 Key Fundamental Principles Goal Alignment All elements of the process have linked/common goals to achieve customer and shareholder defined outcomes. (All functions have goals that are aligned to the operational results- marketing, sales, quality, manufacturing, suppliers, human resources, information technology, etc.) Value Value is always defined from the customer’s perspective. Value Creation All activities (work) from the time a customer need is identified until it is satisfied must add value from the customer’s perspective in meeting that need. (They are willing to pay for it.) Pull Work is initiated only at the signal of demand. Work is synchronized and designed based on demand patterns and known events. Work and inventory are kept at the lowest level of investment possible and unique attributes are delayed until last point possible. Flow Both material and information flow are simplified and optimized to ensure the shortest possible cycle time. The end objective is one piece flow. Roles, Responsibilities and Culture Roles follow process design and responsibilities are based on process performance requirements (fit to process) and are designed to enable line of sight to the whole process. Continuous Improvement There is a systematic change and renewal process to bring about innovation and refinement of efficiency, rhythm time and quality in order to continuously drive down costs and cycle time.
Waste: “any human activity which absorbs resources but creates no value ”
- Lean Thinking ; Womack & Jones, 1996
Taiichi Ohno, defined seven types of waste found in manufacturing processes...
Idle Time Waste
But these ideas apply to most business processes… waste is any “ non-value-added ” activity, where “value” is defined by the customer
Lean Thinking - Make to Order Hierarchy Make to Order - Pull Make to Order - Push/Pull Inventory as a Control Point - Pull Inventory as a Control Point - Push/Pull Make to Forecast - Pull Make to Forecast - Push Ideal “ Postponement” Downward Drivers: 1) Cycle time >Order lead Time 2) Many SKU’s (large # of changeovers) 3) Demand variability > Mfg. Capacity 4) Many raws to many SKU’s High inventory carrying costs 5) High variability in demand (Entity is replenishing according to prior sales) Many J&J Companies (after Lean implementation) 1) Locked in to orders 2) Unresponsive to changes and customer needs 3) High potential for error 4) Production in anticipation of orders Worst Case
“ Lean Thinking Wheel” – Supply Chain M easurable L everageable I mplementable MLI 1. What is customer/market demand variability? 2. What is current supply constraints and variability? 3. Can we make to order? 4. Can we use postponement? 5. Can we use inventory as a control point? 6. What’s my Entitlement process? VSM-Line Live- Renewal 7. What is benefit of Entitlement? (Business Case) 8. What is my implementation plan to get there? 9. What’s my Competitive process? VSM-End State MLI 10. Start over!
Six Sigma / Lean Integration Create a current Value Stream Map Lean Create a future Value Stream Map Lean Prioritize initiatives Six Sigma Charter Projects Six Sigma Use DMAI 2 C for project Six Sigma Use Lean Tools for project Lean Six Sigma Lean
Process Excellence Design Excellence Lean Six Sigma Data Based Problem Solving and Variation Reduction Create Customer Value by Eliminating Waste Design Based on Customer Needs Data Based Decisions + Reduced Waste + Customer Focus = World Class Manufacturing Business Metrics and Dashboards Six-Sigma Six-Sigma / Lean Synergies
Effective Change Management Despair Giving up High expectations Realisation of effort and complexity/Informed pessimism (doubt) Informed Optimism (confidence) Light at the end of the tunnel Optimism + - Time Pessimism with effective change management
Elements of Successful Change Management Strong Business Case Haphazard change, false starts Anxiety, frustration, learned helplessness Diminishing momentum, diffuse effort Low priority , bottom of the in-basket SUCCESSFUL CHANGE = = = = = Strong Business Case Strong Business Case Strong Business Case A Clear and Shared Vision A Clear and Shared Vision A Clear and Shared Vision A Clear and Shared Vision Capacity for Change Capacity for Change Capacity for Change Capacity for Change Actionable First Steps Actionable First Steps Actionable First Steps Actionable First Steps
Six Sigma / Lean - Change Management More than the process Beliefs/ Values Jobs / Organization Process Management / Measurement Systems
What’s wrong with this picture? Six Sigma & DMAI2C Smoke Tree Fence Chimney Antenna Door Window Stairs Shrubs Grass Porch Flowers Roof WIRES Meter Sky Fire
A picture is worth a thousand words Six Sigma & DMAI2C Six Sigma / Lean Make it Visual
Lean Thinking Assessment Scoring Example Johnson & Johnson Sample Country Lean Company Average Company Traditional Company
Lean Thinking Assessment Johnson & Johnson Plant Eliminating waste must turn in tangible financial benefits.
Six Sigma / Lean Thinking / Design Excellence Capital Efficient Profitable Growth Cost of Capital ROIC Growth Operating Margin Net Asset Turnover Cost Management Fixed Asset Management Working Capital Management Revenue Management
DL and IDL Efficiency
Accounts Payable Days
Process Excellence Projects Delivering Shareholder Value