Operational Excellence Framework For The Lean EnterpriseCreated and Proven by Phil Williford
Traditional Operational Business Structure Research & Development Planning and Purchasing Shipping and ReceivingSales & Marketing Customer Service Manufacturing Engineering Finance Quality CUSTOMERS ValueA traditional operational business structure is made up of individual businessdepartments or “silos”, which are not aligned with the creation of value for thecustomers. Each department is focused on departmental objectives and goalsinstead of the creation of overall customer value.
Lean Enterprise Operational Business Structure Value Stream #1 Support Functions Value Creation HR Value Stream #2 Customer Facing QA/RA Functions Value Stream #3 Sales & Marketing Finance EXTERNAL Value Stream #4 Customer Service CUSTOMERS I.T. Value Stream #5 R&D / NPD Facilities Value Stream #6 Receiving Distribution #7 Value CreationThe Lean Enterprise operational structure replaces the traditional “silo” structurewith product Value Streams, where the focus is the elimination of waste and thecreation of value for the customer. Support functions are aligned with the valuestreams in the creation of value and the value streams in turn are aligned with thecustomer facing functions which interact directly with external customers.
Elements of the Lean Enterprise Operational Excellence Framework Operational Excellence Framework Lean Operational Analytics Continuous Improvement DMAIC Problem Solving Visual Replenishment Visual Management Lean Standard Cost Operational Excellence Framework Lean operational excellence is not achieved by superficial imitation or the isolated and random use of lean tools & techniques and systems, but instead requires an understanding of the underlying principles and how those systems are applied as a unified framework with a clear strategy to drive financial results.
Lean Enterprise Visual Management System P Visual Leadership Center Policy Deployment Board Value Stream Visual Leadership Center Daily Departmental Boards & Boards Support BoardsThe Lean Enterprise Visual Management System is the primary Enterprise communicationsystems to manage operations on a daily basis. The system consists of individual ValueStream Boards and a Visual Leadership Center for a centralized daily operational debrief.
Lean Enterprise DMAIC Problem SolvingThe Lean Enterprise Operational Excellence Framework focuses on employee knowledgecreation through problem solving with the Lean DMAIC approach. Lean DMAIC is a structured problem solving approach that breaks problem solving into five phases. Define , Measure , Analyze, Implement and Control. Lean DMAIC directly involves employees in problems solving activities and encourages them to “Learn by Doing”.Under the Lean Enterprise Operational Excellence Framework, employees are developedby teaching them to continuously solve problems with Lean DMAIC to improve theirprocesses. Because the employees are directly involved in the problem solving activities,the employee themselves become agents of changes. The acceptance of changesintroduced through problem solving activities is directly proportional to the level ofemployee participation and involvement. Once employees apply Lean DMAIC and begin todevelop skills through “Learning by Doing”, continuous improvement becomes an integralemployee activity that does not need to be pushed onto them.
Lean Enterprise Continuous Improvement System Employees LEAN DMAICIdeas & Creativity A3 ReportContinuous Improvements activities are documented using the Standard A3 Report whichcaptures all of the phases of the Lean DMAIC problem solving approach.
Lean Enterprise Visual Replenishment System Two Bin System KV (Kanban-Visual) LoopFor Raw Materials and Subassemblies For Finished GoodsThe Two Bin system for raw materials/subassemblies and the KV Loop for finishedgoods, allow for visual inventory management and visual production control whichis directly tied to customer demand. Build what you need, when you needed.
Lean Enterprise Lean Standard Cost System Value Stream Map Std. Flat Labor Routing Earned Hours @ Standard Labor and Standard Overhead Rates Product Plus Materials @ Cost Standard Work Standard costIn the Lean Enterprise Standard Cost System; products are organized by Value Streamsand “Standard Work” is captured in Value Stream Maps, from which the correspondingStandard Flat Labor Routings are calculated. “Standard Work” results in “StandardCosting”, which forms the baseline for continuous improvement measurements. As theStandard Work is improved, the Standard Flat Labor Router is improved, which results ina reduction of manufacturing lead times, inventories and product costs. Improvingstandardized work is a never-ending process.
Lean Enterprise Operational Analytics If Variance = Above STD Gross Positive Profit Margin Labor Mfg. Work Material @ STD Gross Variance If Variance = 0 Orders Burden Profit Margin Analysis @ Standard If Variance = Below STD Gross Continuous Negative Improvement Profit MarginThe Lean Enterprise Operational Analytics System, provides weekly, month to date, andyear to date Value Stream operational reports with the necessary information to measureValue Stream performance against the Standard Gross Profit Margin that is expected fromthe Standard Work processes. If the standard processes are generating negativemanufacturing variances, the Value Streams will engage in Continuous Improvementactivities to resolve the cause of the manufacturing variances. Once the processes arecapable of maintaining the Standard Gross Profit Margin, continuous improvementsactivities are focused on generating positive manufacturing variances to increase the GrossProfit Margin. The Value Stream Reports include, Labor Efficiency, Cost Center Spending,Price Purchase Variance, Material Usage, Scrap, Raw Material / Finished Goods Inventory ,Shipping Revenue and Back Orders / Back Log.
Lean Enterprise and The Role of ERP ERP Lean Operational Database Reports ERP Transactions Visual Management Visual Replenishment ERP System Mfg. Work Orders Inventory Mgmt.In the Lean Enterprise Operational Excellence Framework, the ERP system functions as thecore database and transaction engine. Daily operational management is executed using theVisual Management and Visual Replenishment Systems. Manufacturing work orders,purchase orders, receiving transactions and shipping transactions are captured daily by theERP System and data is stored in the ERP database.
About Phil and Lean Enterprise Operational ExcellenceThe Lean Enterprise Operational Excellence Framework is the result of Phil Williford’s20+ years of combined experience in Lean Management within the Automotive and MedicalDevice industries; with the goal of creating a clearly defined path to a successful andsustainable implementation of an Enterprise Wide Lean Program. The Lean Enterprise Operational Excellence Framework has been proven in both Domestic and International sites.(North Carolina, Florida, Texas, California, Connecticut, Missouri, Puerto Rico, France, Germany and the Czech Republic)• It was used as the foundation for the Medtronic Corporate Lean Sigma Platform.• Utah State University (School of Business) case study in the Shingo Prize modeling for Operational Excellence.• Including the awarding of both the Shingo Prize for Operational Excellence in 2003 and The Shingo Silver Medallion in 2010.