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State of Lean Management, AME Conference keynote by LEI CEO John Shook

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Shook offered whats he has learned about cultural change, the rise and fall and resurrection of various production facilities – and about what’s working soundly at GE’s appliance manufacturing …

Shook offered whats he has learned about cultural change, the rise and fall and resurrection of various production facilities – and about what’s working soundly at GE’s appliance manufacturing facility in Kentucky.

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  • 1. Manufacturing’s Next Chapter: The Story of GE Appliances and the Future of Manufacturing in North America John Shook Lean Enterprise Institute October 2013
  • 2. How we got here… • • AME Conference Planning Meeting - July 6-7, 2012 Topic: AME Toronto 2013 program “I see every value-creating organization as a collection of primary processes, involving many steps that must be performed properly in - James Womack the proper sequence at the proper time” So, here we are, 15 months later: October 22, 2013
  • 3. The State of “Lean” • We’re out to change the world • Making things better through Lean Thinking & Practice – 25 - 30 years in North America • We’ve won some battles, maybe even some wars – Auto industry – Healthcare – New frontiers
  • 4. The State of “Lean” • We’re out to change the world • Making things better through Lean Thinking & Practice – 25 - 30 years in North America • We’ve won some battles, maybe even some wars – Auto industry – Healthcare – New frontiers •  But, there is much yet to be done!
  • 5. Reshoring? • • • • Outsourcing Offshoring Reshoring Rightshoring     Insourcing Reshoring Rightshoring Leanshoring
  • 6. The Outsourcing Lie The economic lie: • CEO: “I am taking money OUT of my wallet and giving it to someone else…” • Typical company piece-price models show illdefined savings. Total cost analysis reveals a very different picture: – Take a look at Harry Moser’s total cost calculator at www.reshorenow.com – Or the story of “Mathew Lovejoy” and “Acme Alliance” at www.lean.org
  • 7. Total Lean Value Streams • From analyzing the value chain as a series of discrete transactions • To seeing the value stream as series of tight connections, each representing a relationship that holds potential for deep learning • Exploiting value streams with this understanding enables quick flexibility and deep adaptability • From optimizing discrete transaction points to creating value streams as adaptive learning systems
  • 8. Lean Value Stream Design Goes Mainstream in Ontario…and Underground “Police said the ring used the “just-in-time” supply model”
  • 9. Manufacturing’s Next Chapter The story of GE Appliances is the concluding chapter of the story of North American manufacturing of the past 50 years. It could be the story of the future of North American manufacturing.
  • 10. Manufacturing’s Next Chapter • What happens when we decide to reshore offshored operations? • When operations go far away, capabilities go with them. • How does an organization identify and go about reacquiring needed skills? • When manufacturing operations go away…
  • 11. A Very Important Factory: Ford Highland Park 100 Years Ago
  • 12. A Supply Chain as One Giant Conveyor Running Through the Country
  • 13. Ford Highland Park
  • 14. Another Important Factory… Ford’s River Rouge Plant
  • 15. River Rouge Giant Conveyors for “Ore to Assembly”
  • 16. 15 million sq. ft. 100,000 workers 100 miles of railroad track 15 miles of roads And, of course, conveyors. 120 miles worth. And 6000 suppliers
  • 17. A Supply Chain as One Giant Conveyor Running Through …the World
  • 18. The Rouge 1932 - Choked by Complexity?
  • 19. Another Important Factory… New United Motor Manufacturing, Inc. – NUMMI – built its first car in December 1984 and its last on April 1, 2010. NUMMI kickstarted a revolution that continues.
  • 20. Lean Success in North America Agreement between Toyota and GM: Toyota manages the plant via the Toyota Production System GM’s “worst” (certified worst) plant: Quality Workforce Former GM workers offered jobs: Including the old “troublemakers”
  • 21. 21 john shook
  • 22. Employee development: Some Classroom Mostly OJT or OJD TPS established: Technical - Physicals, “hard” technology - Product, plant layout, etc. Social - “Soft” technologies - Management/people systems (Note: “soft” doesn’t mean “easy”!)
  • 23. Results In about one year… Quality Productivity Best ever in GM Equal to Takaoka Japan Best in GM Close to Takaoka Japan
  • 24. • NUMMI as example of Successful Culture Change • Sloan Management Review (Limited # of copies available at the LEI booth) • National Public Radio “This American Life” http://www.thisamericanlife.org/ play_full.php?play=403
  • 25. Ford Milpitas CA Plant
  • 26. Ford Milpitas CA Plant Today
  • 27. Model T Plaza Highland Park Today
  • 28. The Rouge Today Rebirth
  • 29. GE Appliance Park – Louisville Kentucky From Reshoring to Rightshoring to Leanshoring
  • 30. GE Appliances $5 billion global business headquartered in Louisville, KY • Appliance Park production began in 1953 • Annual production volume ~3MM units • Park houses global staff, R&D, customer training facilities, manufacturing facilities • $1 billion investment 2010-2014, over 1,300 new U.S. jobs • Largest U.S. appliances production operation • 10,000 employees, @3k represented (IUE, IBEW) • 3,600 employees … 900-acre campus • Six U.S. manufacturing operations located in KY, IN, AL, GA, TN, IL
  • 31. It Started with a Model Line “Can we do this for all of our products?” – CFO GE Appliances Process Inventory reduced 60% Labor efficiency improved 30% Time to produce reduced 68% Space required for line reduced 80% People First hourly kaizen positions (KPO) Cross Functional Team Missing org structure to improve Spring 2009 – First Model Line
  • 32. “Big Room” Process Cross Functional Team Teardowns Mockups Production Visual Schedule 7 Ways Production Prep
  • 33. The Story of the Disappearing Screws • Original design: visible screws  • Marketing: “Want a sleek look with no visible screws.” • Production: “Shooting screws is a lot of work.” • Designers elegant solution… one hidden screw and a rod!
  • 34. The Story of the Disappearing Screws • “If the people who design dishwashers sit at their desks in one building, and the people who sell them sit in another building, and the people who make them are in another country and speak a different language – you never realize that the screws should disappear, let alone come up with a way they can.” - Charles Fishman, The Atlantic
  • 35. Manufacturing’s Next Chapter • “An assembly line is a way of putting parts together. • Lean Production is a way of putting the assembly line itself together. So the work is as easy and efficient as possible.” The Atlantic - Charles Fishman
  • 36. GM Fremont  What Production and People Systems?
  • 37. Manufacturing’s Next Chapter • “An assembly line is a way of putting parts together. • Lean Production is a way of putting the assembly line itself together. So the work is a easy and efficient as possible.” The production system as science, as something to improve, just like an individual job.
  • 38. Manufacturing’s Next Chapter  The production system as science, as something to improve, just like an individual job. Macro enterprise system level Value stream level Factory level Level of each individual job
  • 39. GE Appliances Design of Lean Production and People Systems Rich Calvaruso – Operations Bill McDonough – Human Resources
  • 40. Physical Plant Transformation Completely gutted and refurbished
  • 41. Social Plant Transformation… Which way? Study and Design by Cross Functional Team ? Autoliv Herman Miller NUMMI Winter 2011 – Little Big Room Begins
  • 42. Social Plant Transformation Team Leader Team Leader Team Leader New Leadership Practices • • • • • • • • • Coach Support Motivate Build trust Problem Solvers Communicate Business Objectives & Results Collaborate across functions Sets improvement targets for team Involve and challenge employees AME EHS Design Quality KPO PMQE Area Business Leader Business Leader Maintenance Production Eng. Stewards HR Materials CI Team
  • 43. Improved Jobs, Designed for Improvement
  • 44. Learning and Teaching Jobs via Training Within Industry
  • 45. Doing and Improving Jobs via TWI
  • 46. Great care for the design of each job Simple Easy to do right Hard to do wrong Easy to spot problems
  • 47. Easy to do right, hard to do wrong Easy to spot problems Easy to do pdca Then… Support to solve problems Skill building for continuous improvement Structured support for pdca
  • 48. Errors Happen
  • 49. Problems Happen… what do we do with them?
  • 50. Problems Happen… How do we learn from them? Reactive Trouble-Shooting and Firefighting Reflexive Root Cause Problem-Solving Proactive Target Condition Experimenting Open Innovation Exploring
  • 51. Plan-Do-Check-Act Cycle
  • 52. Foster the Art & Craft of Science from “scientific management” to “management by science” Always asking •What is the real problem?  “What?”  “Why?”   “What if?”  “Why not?” •PDCA, DMAIC, Kaizen, Continuous Improvement – call it what you will, as long as it is an approach to scientific thinking: the art & craft of science. 52 john shook
  • 53. LEAN – and Six Sigma and “Process Improvement” Whether or not it’s all a waste of time is a question of “purpose”…
  • 54. Manufacturing’s Next Chapter  The production system as science, as something to improve, just like an individual job. Macro enterprise system level Value stream level Factory level Level of each individual job
  • 55. GM Fremont  What aligned business purpose?
  • 56. Lean Transformation Model SITUATIONAL APPROACH - Value-Driven Purpose “WHAT PROBLEM ARE WE TRYING TO SOLVE?” PROCESS IMPROVEMENT Clear Roles and Responsibilities CAPABILITY DEVELOPMENT Sustainable improvement capability in all people at all levels Continuous, real, practical changes to improve the way the work is done LEADERSHIP MANAGEMENT Basic Thinking, Mindset, Assumptions That underlies the transformation
  • 57. Transformation Model Questions 1. What is the purpose or what problem are we trying to solve? 2. How are we improving the actual work? 3. How are we building capability? 4. What role should leadership take and how does the management system support the new way of working?? 5. What basic philosophy or thinking underlies or is driving this transformation? SITUATIONAL APPROACH - Value-Driven Purpose “WHAT PROBLEM ARE WE TRYING TO SOLVE?” Clear Roles and Responsibilities PROCESS IMPROVEMENT Continuous, real, practical changes to improve the way the work is done CAPABILITY DEVELOPMENT LEADERSHIP MANAGEMENT Sustainable improvement capability in all people at all levels Basic Thinking, Mindset, Assumptions That drive this transformation
  • 58. “GEMBA” is not just a Japanese concept… “If you want to know about something you ask the people who know; the collier, the countryman, you ask the fellows who cut the hay.” - George Ewart Evans
  • 59. How we got here… So, here we are, October 22, 2013 Four Lean Books
  • 60. And Four More…
  • 61. What is the Lean Enterprise Institute? • Non-profit education and research institute, based in Cambridge, MA, with 16 global affiliates • CEO John Shook, 15 full time employees, extensive list of faculty and associates • Founded in 1997 by Dr. James Womack, principle scientist of the MIT IMVP study that resulted in “The Machine That Changed the World” • Over 250,000 members from all industries • Mission: Advance Lean thinking and practice in all things, everywhere 62
  • 62. LEI Mission and Vision Mission: “Make Things Better Through Lean Thinking & Practice” Vision: A mission-driven institute that bridges academic knowledge with practical, real-world application to help society improve through lean thinking & practice
  • 63. High-Level Transformation Model • Basic Approach: PDCA – The art and craft of science • TWO Pillars: Process Improvement and Capability Development – Process Improvement • Start with the work – Individual level, system level – Capability Development • At all levels • Problem-solving, improvement capability • Specific Approach in each case: Situational, determined by asking – “What problem are we trying to solve?” SITUATIONAL APPROACH - Value-Driven Purpose “WHAT PROBLEM ARE WE TRYING TO SOLVE?” Clear Roles and Responsibilities PROCESS IMPROVEMENT Continuous, real, practical changes to improve the way the work is done CAPABILITY DEVELOPMENT LEADERSHIP MANAGEMENT Sustainable improvement capability in all people at all levels Basic Thinking, Mindset, Assumptions That drive this transformation
  • 64. Lean Enterprise Institute Industry Networking and events Publications Coaching and Co-Learning Education: public and inhouse workshops Digital books, courses, social networking www.lean.org community with over 230,000 members
  • 65. LEI Partnerships • LEI establishes a limited number of collaborative learning partnerships with organizations committed lean transformation.
  • 66. LEI Co-Learning Partnerships • LEI establishes a limited number of collaborative learning partnerships with organizations committed to lean transformation. • We want to see the creation of at least one exemplary “reference model” in each sector, each level and each type of work. • Co-learning projects are defined by determining (together with the partner) the questions to be addressed and the means of addressing them. • For each specific project, define current, ideal and target conditions. Then LEI will provide support: As little as possible As much as necessary
  • 67. Lean Global Network
  • 68. Lean Transformation Technical 69
  • 69. Lean Transformation Social 70
  • 70. People & Process – aligned by leaders to achieve purpose

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