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Lean Benchmarking and value chain optimisation


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This shows how benchmarking and lean benchmarking in partciular can be applied to optimise value chains

This shows how benchmarking and lean benchmarking in partciular can be applied to optimise value chains

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  • 1. Business Growth Opportunities through Value Chain Optimisation Presented by Mark Knowlton MBA (KPS Ltd) SUBCON 2012 NEC Birmingham Wednesday 13th June
  • 2. My Background 2012 Clients 2006 Lean Consulting 2003 Business Adviser, gained MBA 1998 Plant Manager, Manufacturing Director 1990 Engineering, Project Mgt. + Lean training Uni’ of Michigan1979 Engineering Apprentice ,Draughtsman
  • 3. Contact DetailsContact:Mark Knowlton MBAKPS LtdTel 01843 292681Mob 07880 721471Email @MarkKnowlton
  • 4. Lean & Business GrowthLean/Cash flow 5 golden rules The 8 Lean Competencies Supply Chain Case Study Benchmarking for Growth
  • 5. Lean & Business GrowthLean/Cash flow 5 Golden rules The 8 Key Competencies Supply Chain Case Study Benchmarking for Growth Your Next steps?
  • 6. Growth vs. squeeze on profit End Customer Price Company Reductions £ Asking Price Global Market Profit Price Need for Profit Continuous Improvement Manufacturing Cost Value Chain Internal Cost Cost Increases + Supplier Cost Increases Cost Plus Cost Down Time (In the past) (Now)Pressure to reduce Costs and “Do More with Less”
  • 7. Improve or die Improvement 1. Improve 2. Do nothing 3. Decline = Your Company Time = CompetitorDo nothing = fall behind the competition as they improve ! 7
  • 8. Business Growth Defined as: Generating significant positive cash flows for future reinvestment. There are only two ways to grow a business… Increase turnover or Reduce costs (or both)So…how can ‘Lean’ be a driver for growth?
  • 9. Lean…a driver for growthA low cost approach to improvement thatallows companies to: • Increase Capacity • Remove Unnecessary Cost. • Improve Customer Lead Times. • Control Inventory. • Optimise Workplace Layout & Space. • Deliver Better Quality & Service. • Empower Staff and Increase Morale  • And…Improve cash flow! 9
  • 10. Lean improves Cash Flow How can Lean improve cash flow? The production batch size affects everything: Large batch sizes = higher WIP and Stock levels More cash required. Small batch sizes = less WIP and less stock Less cash required.…try the ‘Lego’ – lean simulation exercise
  • 11. Lean & Business GrowthLean/Cash flow 5 golden rules The 8 Lean Competencies Supply Chain Case Study Benchmarking for Growth
  • 12. Lean – impact on Cash Flow Five Golden RulesRule # 1 - Speed up the Order Fulfilment cycle• From order receipt to cash in the bank• Streamline (faster) sales order processing• Map process, Identify and eliminate Waste
  • 13. Lean – impact on Cash Flow Five Golden RulesRule # 2 - Only make what you can sell• Talk to your customers – what is their real demand?• Make to Order• Work towards zero stock (reduce gradually toexpose hidden issues)
  • 14. Lean – impact on Cash Flow Five Golden RulesRule # 3 - Only buy what you need• Local supply where possible (JIT)• Kanban replenishment system (demand driven)• Smaller quantities, greater delivery frequency
  • 15. Lean – impact on Cash Flow Five Golden RulesRule # 4 - Reduce Work In Progress (WIP)• Apply lean principles, reduce batch sizes, WIP andcreate balance flow• Don’t start production until you have all materials• Work towards ‘single piece flow’
  • 16. Lean – impact on Cash Flow Five Golden RulesRule # 5 - Collect what you are owed• Invoice immediately• Identify and fix reasons for non payment• Rigorous debt management process
  • 17. Lean Principles – a quick reminder… Lean is a business improvement technique focused on delivering Value to the customer 17
  • 18. Lean Principles Best Quality + Lowest Cost + Shortest Lead Time Best Safety + Highest Morale Respect Continuous forImprovement People Plan - Do – Check – Act
  • 19. PDCA Cycle repeated to create continuous improvement Performance Plan Do Act Check “Continuous” improvement Time
  • 20. Lean Principles 5. Pursue Perfection 4. Pull System 3. Making Value flow 2. Map the Value Stream1. Customer Value
  • 21. Applying Lean ToolsPrinciples Tools & Techniques1. Customer Value SIPOC, Enhance Value Add Activity. Quality Improvement Tools, Root Cause Analysis.2. Value Stream Value Stream Mapping, Process Mapping, 8 Wastes, Hand off Charts, Spaghetti Diagrams.3. Flow Load Levelling, waste reduction, 5S Workplace Organisation, Line Balancing, TPM, OEE, SMED, SOP’s4. Pull Takt, Kanban, Visual Management5. Perfection Continuous Improvement, PDCA, 6-Sigma, KPI’s , Knowledge Transfer
  • 22. 8 Wastes OverproductionWaiting & Delays Movement of People Transport Inventory Over Processing Skills! Defects
  • 24. Lean & Business GrowthCash flow 5 Golden rulesThe 8 Lean Competencies Supply Chain Case StudyBenchmarking for Growth
  • 25. 8 Key CompetenciesLean is NOT just about tools and techniques!
  • 26. 8 Key Competencies1. Lean Leadership2. Customer Focus3. Empowerment4. Communication5. Core Processes6. Machines and Equipment7. Support Processes8. Supply Chain
  • 27. 1. Leadership• Lean strategy & objectives linked to business plan• Management visibility – “GEMBA” walks• Recognise and celebrate success. MAS –SE Best Practice winners 2010 (Williams Renault Oxford)
  • 28. 2. Customer Focus• Quality – Be proactive ,fix the root cause• Schedule completion - On Time In Full (OTIF)• Industrial marketing - Factory is a “Showroom”
  • 29. 3. Empowerment• Develop motivated, Self Directed teams• Shop floor ownership of continuous improvement• Allow staff to redesign their own processes
  • 30. 4. Communication• Open – two way, encourage feedback• Communications plan, daily - weekly - monthly• Team display boards
  • 31. 5. Core Processes• Begin with 5S – workplace disciplines• Value Stream Mapping to identify savings VALUE STREAM MAPPING Step 1 Map the ‘Current State’ - Capture ideas - Identify Quick wins Step 2 Agree the ‘Future State’ vision Step 3 Map the ‘Future State’ process Step 4 Project Scoping Step 5 Implementation
  • 32. 6. Machines and Equip’• Maintenance Plan• Daily Operator checks and Technician?• SMED + TPM
  • 33. 7. Support Processes• HR ,IT, Engineering’s role = support Manufacturing• KPI’s Balanced Score Card Approach Balanced Score Card example
  • 34. 8. Supply Chain• Procurement Strategy, Portfolio Planning• Develop appropriate supply solutions: Kanban - Consignment - Vendor Managed – JIT High CRITICAL STRATEGIC Contingency Planning Build Partnership VALUE TACTICAL LEVERAGE Contract Out / Kanban Short term agreements High Low VOLUME
  • 35. 8 Key Competencies1. Lean Leadership2. Customer Focus3. Empowerment4. Communication5. Core Processes6. Machines and Equipment7. Support Processes8. Supply Chain
  • 36. Lean & Business GrowthCash flow 5 Golden rules The 8 Key Competencies Supply Chain Case StudyBenchmarking for Growth
  • 37. Supply Chain Optimisation Supply Chain improvement in action with MAS South East Facilitated by Mark Knowlton (2011)
  • 38. Supply Chain Optimisation Background Background• Request from Kent Best Practice Club members• Need to address supply chain issues• “Win-Win” opportunity• Impartial facilitator
  • 39. Supply chain groups Group 3 – Silent GlissGroup 1 – MEP Paul Head – Silent GlissSteve Poulten – MEP Rob Moore - Spa AluminiumMark Foord -Abbey Precision Richard Godbolt - Spa AluminiumJanine Jarrett -Abbey Precision Julie Shilling - EuromarkJason Pither - Turner Tools Mark Durley – EuromarkGroup 2 – CumminsJon Huxtable - Cummins Group 4 – Johnston SweepersSiddharth Raote - Cummins Sarah Hester - Jonson sweepersEmma Booth - Cummins Richard Cardwell Jonson sweepersChris Johnston - Stevens & Carlotti Phil Chapman - Kent Metal DevelopmentsIan Hobbs - Stevens & Carlotti Mark Edge ABT - Products( John Gough - ABT Products Mark Hignett - ABT Products David Simmons Hydraquip Alan Scott Hydraquip Glen Baker Raker - Eng Services
  • 40. Aims and Objectives1. Lean Awareness training for Suppliers2. Supplier issues identified3. Map the Value Stream4. Supply Chain issues identified.5. Agree an improvement plan
  • 41. Supply Chain OptimisationStep 1Lean Awareness trainingfor SuppliersStep 2Suppliers identifytheir own (internal)opportunitiesStep 3Together identify Supply Chainopportunities.
  • 42. Supplier Perspective Late payment Frequent deliveries Our Suppliers Rapid deliveries Long winded ordering process JIT Service Poor quality drawings Kanban System Customers chasing orders Our new equipment Miss-picking Good Packing / labelling Lack of order numbers Quality Communication Long term relationship Picking errors Repeat Orders To many people involved Quality of service Order process not measured Reliability Partnership Online Ordering Sales order process Lack of Tooling investment42
  • 43. Customer Perspective Reactive not proactive Good Quality Some late suppliers Fast turnaround Unreliable suppliers Reactive Stock control / ordering Flexibility Slow machines Knowledge and skills Wasted movement of parts Internal improvements Too much paperwork Lean Production Communication Team work Scheduling Low cost products Shop floor Layout Factory layout Equipment reliability investing in equipment Need to delegate Good Reputation SOP’s Technical Support43
  • 44. Key Issues Summary Area Issue ImpactLead time Request to change Duplicated work + wasteQuantity Changes Increase or decrease Cost impact / Storage spaceDrawing accuracy Change control, Spec, clarity Cost / Lead time / errorsSystems / Process Incompatible Lost time / DuplicationInformation Missing or incomplete Lost timePayment Late or delayed ‘On Stop’ Delays/cash flow 44
  • 45. Benefits and Feedback“A good system to bring suppliers and customers together to improve futureprospects.”Mark Edge, ABT Products.“A great fresher – we now need to transfer to action both within our business andbetween our business and our customer.”Mark Hignett, ABT Products.“Good interaction by the host companies and within the groups and subgroups.”David Symons, Hyrdaquip.
  • 46. SummaryInvolve your customers & suppliers in a VSMworkshop…what’s in it for them?Health warning!• Start internally first – control the direction.• Need good customer / supplier relationships• Group session or individual workshops?
  • 47. Supply Chain OptimisationEmployee BenefitsMulti skilled team Better sense of ownership Higher MoralCustomer BenefitsIncreased flexibility Fewer defects and errors Faster, high quality of serviceSupply Chain benefitsReduced cost of poor quality Increased capacity Increased throughput Reduce Cost
  • 48. Lean & Business GrowthCash flow 5 Golden rules The 8 Key Competencies Supply Chain Case StudyBenchmarking for Growth
  • 49. Benchmarking‘If you don’t know where you are going …any road will lead you there’ Lewis Carol
  • 50. Purpose of Benchmarking To compare against a standard point of reference A systematic process for identifying and implementing best practice.In practical terms…It’s about learning from the experiences of others
  • 51. Research data kindly provided by : Terry Schilling (Director) GBN
  • 52. Research Sample Group450 Responses 44 countries Report published by GBN in 2010
  • 53. Types of BenchmarkingINFORMAL - Comparing with Peers and ColleaguesActively encouraging employees to learn from the experience and expertise of othercolleagues and organisations through comparing practices and processes e.g.through best practice visits, conferences, best practice websites, networkingFORMAL(a) Performance BenchmarkingComparing performance levels of a process/activity with other organisations(b) Best Practice BenchmarkingFollowing a structured process for comparing performance levels and learning whybetter performers have higher levels of performance and adapting/implementingthose better practices
  • 54. Benchmarking vs. other ToolsMost used out of the 20improvement tools areMission and vision statements andCustomer surveys (77%). Closelyfollowed SWOT (72%) and thenInformal Benchmarking (68%)Tools that are likely toincrease significantly inpopularity over the next threeyears are:• Performance Benchmarking,• Informal Benchmarking• SWOT Analysis• Best Practice Benchmarking.
  • 55. Benchmarking Trends• 56% Use Benchmarking• Performance Benchmarking is the most used tool
  • 56. Benchmarking TrendsGrowing interest inChina, the Middle east andAfrica
  • 57. Business Benefits1. Improved Performance2. Improved processes3. Learning from Others4. Strategic issue addresses5. New Products and Service6. Encourage Cultural Shift7. Business Excellence
  • 58. Critical successes factors1. Management Support.2. Reliable comparative data.3. Understanding own processes.4. Clear project objectives.5. Organisations readiness to change
  • 59. 1. Management commitment is vital.2. Requires a structured approach with clear objectives3. Reliable comparative data / willing Partners essential4. Business benefits both Qualitative (Culture shift) and Quantitative (Measurable performance gain)Benchmarking…a business improvement tool that is growing in popularity.
  • 60.
  • 61. 8 Key Competencies1. Lean Leadership2. Customer Focus3. Empowerment4. Communication5. Core Processes6. Machines and Equipment7. Support Processes8. Supply Chain
  • 62. Current Users - sample
  • 63. Comparative dataManufacturing 178 (245)Healthcare 28Automotive 21Furniture 16Aerospace and defence 15Finance / Professional services 11Food and Horticulture 9Construction products 8Printing 3Marine 2Other 35Total 295
  • 64. Company Size mix 11% 9%32% 48% 0 to 9 10 to 99 100 to 999 1000 to 9999
  • 65. What is LeanBenchmark?• An online tool comparing Lean performance• Assessment, Analysis, Recommendations• Personalised LeanBenchmark™ Report
  • 66. Users comments Responses from businesses …cultural transformationThere were a number of benefits to our organisation; this gave us independentfeedback on the status of our lean implementation, it also allowed us to compareand highlight strengths and weaknesses with others in the lean community andanalyse our current status.The gap analysis offered useful suggestions for improvement projects. Theassessment also focused on cultural and organisational transformation rather thanjust the individual uses of lean tools.Philipp Schuell (Lean Specialist) Trumpf GmBH & SPI Lasers Ltd. 66
  • 67. Users comments …clear and understandableIf you are interested in making improvements within your business then I wouldseriously recommend that you consider using this tool as a part of your continuousimprovement tool kit. It really helped to put my company’s Lean competencies intoperspective so that we could look into the future with clear goals ahead of us.Overall I am very happy with the online Lean Benchmarking tool and with theafter service provided.The questions are clear and understandable. The report generated after thequestionnaire is submitted is very in-depth. All of the information and helpprovided is clear, down-to-earth and informative.Keiven Smith (Project Engineer) Cobham Microwave Ltd 67
  • 68. Users comments …see where to focus nextThe benchmarking process has been really valuable, it enabled us to consider howwell we are doing and where we need to focus next. It wasn’t just about seeing howwell our score compared to others (although obviously this was very interesting) therecommendations within the report meant we could identify what we needed to donext.We have now started to build our lean road map with lean objectives linked directlyto the Genzyme businesses goals.Lesley Coombes (Lean Transformation Manager) Genzyme Ltd 68
  • 69. Step 1 - Register
  • 70. Step 2 – self assessment
  • 71. Step 3 View Results 71
  • 72. Step 4 – Download your Report
  • 73. and finally…Applying Lean principles for growth:• Remember the 5 golden rules to improve cash flow: 1. Speed up the order fulfilment cycle 2. Only make what you can sell 3. Only buy what you need 4. Reduce WIP 5. Collect what you are owed• Value Stream Mapping – with Suppliers / Customers• Benchmark performance against sector competitors• Develop a growth plan, focus on 8 Lean Competencies
  • 74. Thank you…Questions? 10 FREE LeanBenchmark™ Vouchers codes available for todays delegates (Normal online cost £99) Contact: Mark Knowlton MBA KPS Ltd Tel 01843 292681 Mob 07880 721471 Email Blog Twitter @MarkKnowlton