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Lean Leadership - Part 3 of 3

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Over the 16 years that we've been providing support to organizations at nearly every stage of the Lean journey, leadership has consistently emerged as the single most important determinant of success. Those organizations with strong leadership engagement soar, while those who don't fail to experience significant transformation.

These are the materials for Karen's third (and final) of three webinars on Lean Leadership. In this webinar, Karen reviewed the system of Lean principles, management practices, and tools, and then focuses on the role of leaders in understanding their organization's value streams, setting the strategic direction for value stream transformation, and monitoring the cycle of improvement.

The webinar recording is available at:http://www.slideshare.net/KarenMartinGroup/lean-leadership-part-3-of-3-webinars-67941809
Not a subscriber? To receive automatic notification of future webinars, gain access to our library of free assessments and templates, and receive our occasional newsletter with improvement tips: www.ksmartin.com/subscribe.

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Lean Leadership - Part 3 of 3

  1. © 2015 The Karen Martin Group, Inc. 1
  2. Lean Management Components Core Values / Principles / Philosophy • Analytical tools • Value stream analysis & mapping • Metrics-based process mapping • Root cause analysis: Five Why’s, Fishbone, Pareto, Problem tree, FMEA • Waste Countermeasures • Standard work • Quality at the Source / Error proofing • 5S / Visuals • Pull systems: One-piece flow, FIFO lanes, Kanban • Cells / co-location • Level loading • Work balancing • Batch size reduction • Setup & changeover reduction • Work segmentation • Autonomation • Cross-training / multi-functional workers • Strategy deployment (hoshin planning) • Value stream management • Key performance indicators (three levels, including customer & operational metrics) • Disciplined process management via clear owners & KPIs • Daily kaizen • PDSA Problem Solving (& A3 management) • Performance dialogues / huddles / standups • Go & see (gemba) management • Humble inquiry • Continuously seeking voice of the customer • Purposeful meetings & reporting • Lean accounting • Consensus management • Humility • Respect • Curiosity • Transparency • Relentless pursuit for perfection • Customer value • Flow / waste elimination • Just in time • Visual management • Work standardization Lean Management © 2016 The Karen Martin Group, Inc. 2
  3. Lean Leadership Webinars – Parts 1 & 2 www.ksmartin.com/webinars Core Values / Principles / Philosophy • Analytical tools • Value stream mapping • Metrics-based process mapping • Root cause analysis: Five Why’s, Fishbone, Pareto, Problem tree, FMEA • Waste Countermeasures • Standard work • Quality at the Source / Error proofing • 5S / Visuals • Pull systems: One-piece flow, FIFO lanes, Kanban • Cells / co-location • Level loading • Work balancing • Batch size reduction • Setup & changeover reduction • Work segmentation • Autonomation • Cross-training / multi-functional workers • Strategy deployment (hoshin planning) • Value stream management • Key performance indicators (three levels, including customer & operational metrics) • Disciplined process management via clear owners & KPIs • Daily kaizen • PDSA Problem Solving (& A3 management) • Performance dialogues / huddles / standups • Go & see (gemba) management • Humble inquiry • Continuously seeking voice of the customer • Purposeful meetings & reporting • Lean accounting • Consensus management • Humility • Respect • Curiosity • Transparency • Relentless pursuit for perfection • Customer value • Flow / waste elimination • Just in time • Visual management • Work standardization Lean Management © 2016 The Karen Martin Group, Inc. 3
  4. Lean Management Components – Part 3 Core Values / Principles / Philosophy • Analytical tools • Value stream mapping • Metrics-based process mapping • Root cause analysis: Five Why’s, Fishbone, Pareto, Problem tree, FMEA • Waste Countermeasures • Standard work • Quality at the Source / Error proofing • 5S / Visuals • Pull systems: One-piece flow, FIFO lanes, Kanban • Cells / co-location • Level loading • Work balancing • Batch size reduction • Setup & changeover reduction • Work segmentation • Autonomation • Cross-training / multi-functional workers • Strategy deployment (hoshin planning) • Value stream management • Key performance indicators (three levels, including customer & operational metrics) • Disciplined process management via clear owners & KPIs • Daily kaizen • PDSA Problem Solving (& A3 management) • Performance dialogues / huddles / standups • Go & see (gemba) management • Humble inquiry • Continuously seeking voice of the customer • Purposeful meetings & reporting • Lean accounting • Consensus management • Humility • Respect • Curiosity • Transparency • Relentless pursuit for perfection • Customer value • Flow / waste elimination • Just in time • Visual management • Work standardization Lean Management © 2016 The Karen Martin Group, Inc. 4
  5. www.ksmartin.com/webinars 5
  6. You will learn… • What’s a value stream? • What are the organizational benefits of looking at work through the value stream lens? • What’s involved in a value stream transformation cycle? • What’s a value stream map? • Why is VSM a team-based, leadership-heavy activity? • How does one prepare for a mapping activity, create current and future state maps, and develop a transformation plan? • Key success factors
  7. Wherever there is a request and a deliverable, there is a value stream.
  8. Value Stream All of the activities required to transform a customer request into a good or service. 8 First defined in The Machine That Changed the World, James Womack, Daniel Jones, & Daniel Roos, 1990. Process ProcessProcess Customer Request Customer Receipt
  9. 1996 Value Value stream Flow Pull Perfection Value Stream’s Roots
  10. Value Stream Mapping Progression 10 Mike Rother & John Shook 1999 Beau Keyte & Drew Locher, 2004 & 2015 Karen Martin & Mike Osterling 2014 “Whenever there is a product for a customer, there is a value stream. The challenge lies in seeing it.”
  11. Work: Degrees of Granularity 11 Value Stream Process Process Process Step StepStep Macro Perspective • Define strategic direction (“what”) • Heavy leadership involvement • Value Stream Mapping Micro Perspective • Identify the tactical “how” • Heavy frontline involvement • Metrics-Based Process Mapping
  12. Work: Levels of Granularity 12 Begin Discussions with Prospective Client Negotiate & Execute Contract Communicate Plan Options & Enrollment Process Enroll Employees Service the Contract Value Stream Process Negotiate pricing Approve Negotiate terms Approve Execute Contract CUSTOMER
  13. Function FunctionFunctionFunction Core Value Stream Support Value Stream Support Value Stream Silo-Centric vs. Value Stream Thinking Value stream segment Value stream segment
  14. One Value Stream Map for Each Product Family Function A Function B Function C Function D Function E Function F Function B Function H X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X Value Stream Map #1
  15. Value Stream Scoping Diagram: Defining Specific Conditions Golden State Equipment, Inc. Capital Equipment 80% $; 10% vol. Catalog 40% Configure to order 15% Engineer to order 35% Custom hardware 20% Custom software 20% Both 60% New Product Development 10% Spares & subassemblies 20% $; 90% vol. Catalog Engineer to order 15
  16. Value Stream Mapping Benefit: Seeing the Whole 16 Value Stream Mapping enables a mapping team to get ABOVE the work
  17. 17
  18. 18
  19. Strategy Before Tactics Options: • I-55/57 & I- 30 • I-70 & I-44 • I-69 & I-30
  20. 20
  21. VSM Promotes System Thinking 21 System Efficiency = Optimal Value Stream Performance Departmental Efficiency ≠ System Optimization
  22. 22 © 2016 The
  23. Visualize Information Management Problems 23
  24. 24 Visualize the entire cycle of value delivery on a single sheet of paper 24
  25. Value Stream Mapping Facilitates Leadership Consensus & Accelerates Improvement
  26. Sample Future State Decisions • Replace sales commissions with annual profit sharing. • Insource an outsourced activity. • Restructure broker relationships. • Merge two departments. • Shift work from one department to another. • Push authorizations down two levels. • Eliminate a department (with staff redeployment to other areas). • Build the means for customers to order online. • Add value stream owners to org chart. • Double the financial levels of authority. 26
  27. Improvement Roles Who? Accountability Practice / Tool Sr. Leaders What has to happen Hoshin Planning, Value Stream Mapping Frontlines How it will happen” Projects, Kaizen Events, Just-do-its, Daily Kaizen StrategicTactical Middle Management
  28. Value Stream Improvement Annual Goals & Priorities (Strategy Deployment) or High-level A3 Projects (w/ or w/o A3), Rapid Improvement Events (Kaizen Events), Daily Kaizen (Kata)
  29. 29 1 Information Flow 2 Work Flow 3 Timeline Basic Current State Value Stream Map
  30. Lead Time vs. Process Time Lead Time (LT) Work Received Work passed to next process or department Process Time (PT) Lead Time = Elapsed time; Throughput time; turnaround time Process Time = Touch time; work time; cycle time Work is Idle Work is Idle
  31. Measuring In-Process Quality: Percent Complete & Accurate (%C&A) Customer Process 1 Process 2 Process 3 Process 4 80% 50%95% 75% 90% %C&A = % of incoming work that’s “usable as is”; no need for rework: • Correcting information or material that was supplied • Adding information that should have been supplied • Clarifying information that should have or could have been clearer 31
  32. Customer 1 Process 3 Function E LT = 0.5 days PT = 30 mins. %C&A = 95% 4 4 10 mins. 1 days 120 mins. 2 days 30 mins. 0.5 days Total LT = 3.5 days Total PT = 160 mins. Activity Ratio = 9.5% Rolled %C&A = 89.3% Process 2 Function C LT = 2 days PT = 120 mins. %C&A = 95% 3 3 IT-1 IT-2 5 items Process 1 Function A LT = 1 days PT = 10 mins. %C&A = 99% 5 2 1 items 10 items Standard work Modified approvals IT interface Cross- train Cross- train Standard work Error proof Basic Value Stream Map: Future State
  33. Value Stream Performance Sample Results Metric Current State Projected Future State Projected % Improvement Lead Time (PO to shipping) 17 months 7.5 months 56% Process Time 600 hours 450 hours 25% (22 FTEs) Rolled % Complete & Accurate 0% 21% > 2,000% On-time delivery 13% 90% 592% # Internally-produced Change Orders 25/project 12/project 52% Freed Cash flow $25M per year
  34. Prepare Understand Current State Design Future State Develop Transformation Plan Execute Transformation Plan 3-4 consecutive days of Accelerated Learning & Design (ALD) 4-8 weeks prior to ALD sessions 3-9 months following ALD sessions Repeat Value Stream Transformation Cycle 34 • Charter development • Team formation • Data collection & review • Team prep
  35. 1 2 1 3 2 4 3 5 4 5 1 6 2 7 3 8 4 9 5 10 1 2 1 3 2 4 3 5 4 1 2 3 4 Date: Date:engagement, financials, lead time, safety records, etc. effectiveness, market trends, customer satisfaction, employee Signature: Date: Relevant Data Agreement Examples: work volume & volume variation, process quality & Executive SponsorWhat data is required to understand relevant current state isues. Signature: Signature: How will the business, internal and external customers, and Function internal and external suppliers benefit from value stream improvement? SMEs that may not be needed full time Always a nice touch; keeps the team from wandering On-site, ample wall space, quiet/private location Benefits to Customers & Business On-Call Support Increase <defined metric> from X to Y (Z% improvement). Reduce <defined metric> from X to Y (Z% improvement). Measurable Target Condition What's driving the need for improvement? Function Leadership-heavy Current State Problems & Business Needs Mapping Team Boundaries & Limitations Improvement Time Frame What is the team NOT authorized to change? Typically 3-6 months Last Step Task on last process block Logistics Coordinator Not always needed Aids in consensus building and organizational learning. Typically the last hour of the day. First Step Task on first process block Briefing Dates & Times Meals Provided Briefing Attendees ** required *optional List the the people that are required to attend the briefings (**) and those whose attendance is optional (*). Demand Rate Trigger How many times is this done per wk, qtr, mo, or yr? What initiates the process? Value Stream Mapping Charter Scope Accountable Parties Logistics Required: typically VP or C-level If needed—often director or manager level Specific Conditions What circumstances are included and excluded? (e.g., type of customer, geographic location, etc.) Value Stream Champion Value stream being improved Executive Sponsor Value Stream Event Dates & Times 3 days typically; consecutive is best; 6 hrs per day minimum; 7 or 8 hrs is best Required: skilled, objective person leading the activity Base-camp Location Facilitator Name Name FacilitatorValue Stream Champion Contact Information Contact Information Charter: Critical planning, communication, and consensus-building tool Available at www.ksmartin.com/vsm-charter
  36. What problem are you trying to solve? 36 Desired State (or known standard) Current State Gap = Problem
  37. Agency 1.3 hrs. 5.0 hrs. 10.0 days 3.0 hrs. 5.0 days 0.2 hrs. 1.0 days 1.0 hrs. 3.0 days 5.0 hrs. 2.0 days 1.3 hrs. 1.5 days 8.0 hrs. 4.0 hrs. 10.0 days 0.1 hrs. 10.0 days 40.0 hrs. 10.0 days 4.0 hrs. 7.0 days 3.0 hrs. 64.0 days Total LT = 124.7 days Total PT = 75.8 hrs. Activity Ratio = 8% Customer's Order System Apptus/ Design C9 Apollo Create Opportunity Conduct Credit Check Sales Credit LT = 0 days PT = 1.25 hrs. %C&A: 60% 1 Create & Send Proposal Validate Opportunity create IO Sales Strategic Response LT = 2 weeks PT = 5 hrs. %C&A: 80% 2 Rev iew & Negotiate Deal Via Unsigned IO Sales Deal Desk LT = 1 weeks PT = 3 hrs. %C&A: 66% 4 3 Sign & return IO Customer LT = 1 days PT = 0.25 hrs. %C&A: 100% 4 Confirm Campaign Details Direct Teams to setup campaign, obtain assetsAcct Mgmt LT = 3 days PT = 1 hours %C&A: 52% 5 Setup & Launch Campaign Ad Operations Analytics LT = 2 days PT = 5 hrs. %C&A: 50% 30 6 Obtain Ext. Data & Config. Auto Load (AO) Acct Mgmt Ad Operations LT = 1.5 days PT = 1.25 hrs. %C&A: 80% 7 Rolled %C&A = 1.9% Monitor Campaign & Trouble Shoot Operations Acct Mgmt Analytics LT = 0 days PT = 8 hrs. %C&A: 50% 8 Inv oice Customer (Batch = 1x/ mnth) Finance LT = 2 weeks PT = 4 hrs. %C&A: 60% 13 9 Send Commission Report To Comp (Batch = 1x/mnth) Finance LT = 2 weeks PT = 0.1 hrs. %C&A: 99% 10 Assign Campaign To Reps (Batch = 45 Days) Comp LT = 10 days PT = 40 hrs. %C&A: 95% 11 Pay Commission Finance Payroll LT = 7 days PT = 4 hrs. %C&A: 100% 12 Notify Client They Are Liv e &Send SS's Acct Mgmt Ad Operations LT = 1 days PT = 1 hrs. %C&A: 98% 7B Receiv e Cash (inv oice payment) 90 Calendar days = 64 working days LT = 64 days PT = 3 hrs. %C&A: 100% 6 13 Marketing Campaign Current State Value Stream Map 1,000 Campaigns per Month Rev iew & sign IO Finance Legal Analytics Product LT = 2 days PT = 0 hrs. %C&A: 95% 3B Up Sell & Ask For Incr. Rev enue Acct Mgmt Sales LT = 0 days PT = 1 hrs. 8B Send Wrap-Up Reports & Cond. QBR's Acct Mgmt Sales Analytics LT = 0 days PT = 2 hrs. 9B Rate Card Kanter Data.com Credit Safe Forsev a DNB Sales Force JIRA Fuel/ DSP Admin Excel/ Google Sheets NetSuite Customer's Billing System ADPXactlyX1 Agency's Customer
  38. Go to the Gemba to learn how work REALLY gets done Go & See Ask Why Show Respect
  39. Daily Leadership Briefings Day 1 – Share insights; reduce resistance Day 2 – Build consensus re: future state Day 3 – Gain commitment for action plan 39
  40. Agency 0.5 hrs. 2.5 hrs. 10.0 days 2.0 hrs. 5.0 days 0.2 hrs. 1.0 days 0.5 hrs. 3.0 days 2.0 hrs. 0.4 days 1.3 hrs. 1.5 days 6.5 hrs. 0.2 hrs. 4.0 days 0.1 hrs. 5.0 days 16.0 hrs. 5.0 days 4.0 hrs. 7.0 days 2.0 hrs. 53.0 days Total LT = 95.8 days Total PT = 37.8 hrs. Activity Ratio = 5% Customer Order Systems Apptus/ DocuSign C9 Create Opportunity Conduct Credit Check Sales Credit LT = 0 days PT = 0.5 hrs. %C&A: 90% 1 Create & Send Proposal Validate Opportunity Create IO Sales Acct Mgmt Strategic Response LT = 2 weeks PT = 2.5 hrs. %C&A: 90% 2 Rev iew & Negotiate Deal Via Unsigned IO Sales Deal Desk LT = 1 weeks PT = 2 hrs. %C&A: 90% 3 Sign & return IO Close IO in SFDC Customer Sales LT = 1 days PT = 15 mins. %C&A: 100% 4 Confirm Campaign Details Obtain Creativ e Assets Acct Mgmt LT = 3 days PT = 30 mins. %C&A: 75% 5 Setup & Launch Campaign Ad Operations Analytics LT = 3 hours PT = 2 hrs. %C&A: 70% 6 Obtain Ext. Data & Config. Auto Load (AO) Acct Mgmt Ad Operations LT = 1.5 days PT = 1.25 hours %C&A: 95% 7 Rolled %C&A = 27% Monitor & Trouble Shoot Campaign Operations Acct Mgmt Analytics LT = 0 days PT = 6.5 hrs. %C&A: 80% 8 Send Commission Report To Comp. (Batch = Weekly) Finance LT = 5 days PT = 5 mins. %C&A: 99% 10 Assign Campaign To Reps (Batch = Weekly) Comp LT = 5 days PT = 2 days %C&A: 99% 11 Pay Commission Finance Payroll LT = 7 days PT = 4 hrs. %C&A: 100% 12 Notify Client They Are Liv e &Send Screen Shots AM Ad Operations LT = 1 days PT = 1 hrs. %C&A: 98% 7B Reciev e Cash (Inv oice Payment) 75 Calendar days=53 working days LT = 53 days PT = 2 hrs. %C&A: 100% 13 Marketing Campaign Future State Value Stream 2,000 Campaigns per Month Up Sell & Ask For Incr. Rev enue AM Sales PT = 0.5 hrs. 8B Send Wrap-Up Reports & Cond. QBR's AM Sales Analytics PT = 2 hours 9B Gainsight Kantar Data.com Creditsafe Forsev a DNB Sales Force JIRA Fuel/ DSP Scale Tool NetSuite Customer's Billing System ADPXactly Agency's Customer Inv oice Customer (Batch = end of campaign + 4 days) Finance LT = 4 days PT = 0.25 hrs. %C&A: 95% 2 9 Define, test and roll out AM role in proposal process Migrate rate card to SFDC Automate deal approval (w/ exception processing) Automate IO load into SFDC Implement BI Create FYI email to client confirming campaign launch Define opportunity and create standard wrok re: entry into SFDC (including timing) Implement signed IO closed date + X days Create master data Evaluate keeping C9 vs. creating SFDC forecast tool; implement decision Eliminate JIRA Improve tie-out Launch campaigns within 1 hr of receiving signed IO and creative Improve quality of external reports Continue testing & evaluate Gainsight and finish roll out if OK Complete development & roll out scale tool Make insight generator more robust Create means for giving customers greater insight Get customer invoice requirements upfront Automate external reports for invoicing Consolidate to one vendor for credit checks Create executive dashboard Define forecasting data needs, methodology, timing & system(s) of record Design and implement lock box automation Optimize for credit card payments (where applicable) Create weekly commissionable revenue report Implement multi- seat support Find means to eliminate Admin & Apollo Design & implement system integration Define and gain consensus re: "transparency" (geo specific) Future State VSM: Your Blueprint
  41. 41 J F M A M J J A S O N D 1 All existing customers with RFQ have access to form; %C&A of quotes = 90% KE1 Sean Michaels X X 0% 2 Reduce PT @ review step and ensure RFQ omissions are detected at this step KE1 Sean Michaels X X 50% 3 All estimates created using template; reduce estimate PT to 1.5 hours KE2 Dave Gerald X X 75% 3,4 Central repository for estimate history Proj Diana Marie X 100% 6 Eliminate manual emails between sales and estimating Proj Diana Marie X 100% 8 Fewer bugs passed on to production KE3 Ryan Austin X 50% 8 Designated resources for ETO SW develop - shorter LT & improved leveraging of experience Proj Michael O'Shea X X 0% 8,9 Less guessing re: customer requirement; fewer assumptions and bad design passed to production JDI Diana Marie X 100% 8,9 Eliminate need for CS to compile specification package for eng, SW & production Proj Diana Marie X X X 10% 7 Eliminate need to maintain BOMs in BlueStreak; eliminate licencing cost Proj Dave Gerald X X 50% 7 Free up time in Sales group (only contacted if significant variance) JDI Danny Tran X 100% 10 Customer service able to review PO and create SO KE4 Danny Tran X X 100% Value Stream Transformation Plan Value Stream Golden State Equipment, Inc. Scheduled Review Dates Executive Sponsor Allen Ward 9-Aug-13 18-Oct-13 Value Stream Champion Nancy Little 23-Aug-13 8-Nov-13 Value Stream Mapping Facilitator Dave Parks 9-Sep-13 26-Nov-13 Activate auto-notification in SalesForce (work flow) Date Created 7/26/2013 30-Sep-13 19-Dec-13 FS VSM Block # Goal or Measurable Target Proposed Countermeasure Exec. Method* Owner Planned Timeline for Execution Status Standard RFQ form/checklist developed and made available to customers Standard review criteria developed for sales to check incoming RFQs Update existing estimating template Link Excel and Salesforce Improved software testing routines Designated SW development team for ETO product Give Eng design and SW Dev open access to sales and specification documents from quoting process Link data files in SalesForce to SO and WO in SAP Activate BOM costing in SAP Customer service reviews and approves PO (compares to quote) Standard work defined for PO review
  42. Managing the Value Stream • Key Performance Indicators 2-5 relevant value stream KPIs (need process level KPIs as well) Operations heavy Set targets and visual management boards; track • Ownership Designated person – Value Steam Owner Monitors KPIs and communicates performance to plan Drives problem solving and ongoing improvements; ensures alignment with strategy
  43. 43 Monitoring Value Stream & Process Performance Value Stream Value Stream Owner Process Process Owner Outpatient Imaging Sally V Scheduling & Registration Bill G Exam & Clinical Reporting Jose C Reports to physician Maria J Inpatient surgery Tonianne S Admission Tom M Clinical stay Kathleen T Discharge Mike M Billing Sylvia S Revenue Cycle Management Bruce T N/A N/A Value Stream & Process Ownership ABC Medical Center
  44. 44 Value Stream Ownership 44
  45. 45 And Repeat…
  46. 46 It’s not about the map. It’s about the conversations, the insights, the decisions, the organizational healing that mapping enables.
  47. © 2016 The Karen Martin Group, Inc. 47 To Learn More… • Books • Value Stream Mapping (Martin & Osterling) • The Complete Lean Enterprise (Keyte & Locher) • Learning to See (Rother & Shook) • Public Workshops & Conferences • Association for Manufacturing Excellence • Lean Enterprise Institute • Shingo Institute • Webinars – www.ksmartin.com/webinars
  48. Questions or comments? 48
  49. ksm@ksmartin.com 49 www.ksmartin.com/subscribe

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