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Implementing the Lean Turnaround Masterclass by Art Byrne

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Shown at the Lean Summit 2013 - Lean Transformation: Frontiers and Fundamentals on 5th, 6th & 7th November 2013

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Implementing the Lean Turnaround Masterclass by Art Byrne

  1. 1. IMPLEMENTING THE LEAN TURNAROUND November 5, 2013
  2. 2. TODAYS SESSION • Introductions - - - Your Objectives • Art Byrne Background • Lean vs. The Traditional Approach • Obstacles you Will Have To Overcome • Why Lean? • What You Need To Know Before You Start • Lean Implementation • The Leaders Role
  3. 3. ART BYRNE BACKGROUND • General Manager High Intensity And Quartz Lamp Department, General Electric • Group Executive Danaher Corporation • CEO The Wiremold Company • Operating Partner, JW Childs Associates 31 YEARS AND COUNTING
  4. 4. PRODUCTIVITY EQUALS WEALTH
  5. 5. LEAN vs. TRADITIONAL APPROACH Lean Thinking Is The Opposite Of The Traditional Approach Hard To Accept That Everything You Have Been Taught/Learned Is Wrong Even Harder For The Rest Of Your Associates To Accept And Change EVERYTHING HAS TO CHANGE
  6. 6. LEAN vs. TRADITIONAL • Understand Value Added vs. Non Value Added • Focus On Processes Not Results • Move From Batch To Flow • Switch from Push To Pull • Eliminate Inventory vs. Rely On Inventory
  7. 7. LEAN vs. TRADITIONAL • Long Production Runs vs. Short Runs, Quick Changeovers • Big Capital Spending vs. Use Your Brain And Not Your Wallet • Buy Large Quantities For Volume Discounts vs. Daily Deliveries • Encourage Big Orders/Volume Discounts vs. Level Loading, One Price Into Stock
  8. 8. EVERYTHING HAS TO CHANGE • You Can’t Drop Lean On A Traditional Batch Operating Structure • Sales Approach Must Change • Accounting Approach Must Change • Different Approach To People • Management Focus Is Different THIS IS A BIG UNDERTAKING
  9. 9. TRADITIONAL ORGANIZATION CHART IS UPSIDE DOWN • Traditional: CEO On Top Of Pyramid, Work Force [Value Adders] On The Bottom • Lean: Value Adders On Top CEO on Bottom • ROLE OF MANAGEMENT IS TO SUPPORT THE VALUE ADDERS EVEYDAY, IF NOT YOU ARE WASTE
  10. 10. YOU WILL FACE A LOT OF OBSTACLES
  11. 11. OBSTACLES • People Don’t Like Change • Your People Will Challenge You/Fight You • “We Don’t Make Cars” • “This Will Never Work Here” • “We Are Different Than Other Companies • “This Is The Stupidest Idea Yet”
  12. 12. OBSACLES CONTINUED • Getting You Staff To Function Like A Team • Overcoming/Dealing With “Concrete Heads” • Changing The Way Direct Supervisors Approach/Deal With The Work Force • Customer Service Issues Will Crop Up
  13. 13. MORE OBSTACLES • Every Machine Will Likely Have To Be Moved - - - More Than Once • Not Everything Will Go Right The First Time • “See, I Told You This Wouldn’t Work” • Job Classifications Will Have To Be Consolidated • The Approach To Pay May Have To Change
  14. 14. EVEN MORE OBSTACLES • How Do You Get Everyone On Board? • How Do You Educate Everyone About Lean? • Where Do You Get The Lean Knowledge? • How Do You Cross Train Your People? • How Do You Hire The Right People?
  15. 15. LEAN IS EASY TO SAY HARD TO DO ARE YOU STILL INTERESTED IN MAKING THE SHIFT TO LEAN?
  16. 16. WHY LEAN?
  17. 17. WHY LEAN? • You Are Running A Business • You Should Want To Maximize Results For All Stakeholders • Your People • Your Customers • Your Shareholders LEAN IS THE GREATEST STRATEGIC WEAPON YOU WILL EVER SEE
  18. 18. WHY LEAN? • Deliver Value To Your Customers • Gain Market Share And Grow • Fantastic Financial Results • Create Wealth For All Stakeholders • Enhance The Skills And Value Of Your Employees
  19. 19. WIREMOLD RESULTS • Lead Times From 4-6 Weeks To 1-2 Days • Productivity Up 162% • Gross Profit From 38% To 51% • Machine Changeovers From 3x Per Week To 20-30 A Day • Inventory Turns From 3x To 18x • Customer Service From 50% To 98% • Sales More Than Quadrupled • EBITDA Grew From 6.2% To 20.8% • Operating Income Up 13.4x • Enterprise Value Increased By 2,467%
  20. 20. VIRGINIA MASON RESULTS • Nurses Spend 90% With Patients vs.35% • Time To Report Lab Results Down 85% • Cost Of Supplies Down $1Million A Year • Hospital Liability Costs Down 49% • A/R Days >90 Days Down 74% • Surgery Center; Cases Per Day Up 60% • Pharmacy; Order To Available Time -93% • Margin $’s; $0.7M in 2,00 To $41M In 2,010
  21. 21. ASR RESULTS • Result %Change • Inventory Turns 2.5x To 6.2x +148% • W/C As % To Sales 34% To 15% -50% • Customer Service 85% To 98% +15% • EBITDA Margin 17% To 23% +35% • Cash Freed Up $65 Million NA
  22. 22. ESSELTE RESULTS • From $5M EBITDA In 05 To $80M Now +1,500% • Reduced Working Capital By $200 Million • Lowered Headcount By 47% • Freed Up 2.4M Sq. Feet Of Space • Gained 9 Points Of Gross Margin In Europe Alone
  23. 23. WHY DOESN’T EVERYONE DO THIS? • “I Can Tell You” • “I can Show You” • “I Bet You Can’t Do It” • Yoshiki Iwata CHANGING OLD HABITS IS HARD WORK
  24. 24. WE THINK ABOUT THIS ALL WRONG • Lean Is A Strategic Approach To How You Run Your Business • It Is Not Just A Bunch Of Tools • Saying “We Have Black Belts And Green Belts So We Are Lean” Is Ridiculous • It Is Not Just Some Training Exercise
  25. 25. TO BE A LEAN ENTERPRISE • All Functions Must Participate • Otherwise You Will Fight Yourself • Customers See You As A Single Entity DON’T JUST DO LEAN- BE LEAN
  26. 26. WHAT DO YOU NEED TO KNOW?
  27. 27. MANAGEMENT MUSTS • Lean Is The Strategy • Lead From The Top • Transform The People LEADERSHIP IS THE KEY INGREDIANT
  28. 28. STRATEGIC EXAMPLE • Company A Has A 1 Hour Set Up Time • Company B Has A 1 Minute Set Up Time • Who Has The Lowest Cost? • Who Has The Best Customer Service? MANUFACTURING OR STRATEGIC?
  29. 29. LEAN IS ALL ABOUT PEOPLE
  30. 30. WITHOUT LEADERSHIP COMMITMENT DON’T EVEN START DOWN THE LEAN PATH
  31. 31. LEAN FUNDAMENTALS Work To TAKT Time One Piece Flow Standard Work Pull System BE RELENTLESS IN ESTABLISHING THESE EVERYWHERE
  32. 32. THE BASIC THRUST • Improve Your Value Adding Activities • Deliver More Value To Your Customers • Compete On Your Operational Excellence LEAN IS A TIME BASED GROWTH STRATEGY
  33. 33. UNDERSTAND VALUE ADDED • Value Added • Non-Value Added But Necessary • Non-Value Added- - - Waste ELIMINATE THE WASTE
  34. 34. HOW TO IMPLEMENT A LEAN TURNAROUND
  35. 35. OBTAIN THE LEAN KNOWLEDGE • Books - - - - Plenty Of Options • Visit Lean Companies • Participate In A Few Kaizens Yourself • Find A Lean Consultant • Get As Much Personal Knowledge As You Can
  36. 36. UP FRONT WORK • Articulate The Vision/Strategy • Establish Core Values • Set Expectations • Lean Consultant Plus A KPO Office
  37. 37. WIREMOLD STRATEGY Be The Leading Supplier In The Industries We Serve And One Of The Top 10 Time Based Companies – Globally 1. CONSTANTLY STRENGTHEN OUR BASE OPERATIONS 100% On Time Customer Service 50% Reduction In Defects – Each Year 20% Productivity Gain – Each Year 20x Inventory Turns Visual Control And The 5S’s 2. DOUBLE IN SIZE EVERY 3 TO 5 YEARS Pursue Selective Acquisitions Use QFD To Speed New Product Introductions
  38. 38. CORE VALUES PEOPLE CUSTOMERS KAIZEN COMBINE INTO A KAIZEN CULTURE
  39. 39. EMPLOYEE EXPECTATIONS Respect Others Tell The Truth Be Fair Try New Ideas Ask Why Keep Your Promises Do Your Share
  40. 40. ORGANIZE FOR LEAN • Create A Value Stream Organization • Team Leaders • KPO Office • All Equipment And Support Staff • Own The Key Measurements • Weekly Report Out To CEO And Staff
  41. 41. VALUE STREAM STRUCTURE • Team Leader – Sits On The Shop Floor • Buyer/Planner • Shop Floor Engineers • Cell Leaders • Operators • Support Functions e.g Marketing, Finance
  42. 42. TEAM LEADER PROFILE • Self Starter – Problem Solver • Relates Well To People Up Or Down • Able To Run A Reasonable Size Business • Potential To Grow At Least Two More Levels • Compatible With Customers And Sales Force
  43. 43. GETTING STARTED CEO Should Present The Strategy WHAT WHY HOW EXPECTED RESULTS CEO Should Do Initial Training CEO Should Select Initial Kaizens – Set Stretch Goals
  44. 44. KAIZEN OBJECTIVES Focus On Value Adding – Eliminate Waste From Batch To Flow, From Push To Pull Set Up Reduction And The 5S’s Are Foundational INVENTORY IS THE ROOT OF ALL EVIL
  45. 45. SETUP REDUCTION EXAMPLES • Rolling Mill 720m To 34m -95% • 150 Ton Press 90 To 5 -94% • PM Punch Press 52 To 5 -90% • Hole Cut Mill 64 To 5 -92% • 2.5” Extruder 180 To 19 -89% • Injection Molder 120 To 15 -88% AVG. SETUP REDUCTION = 91%
  46. 46. THE 5S’s • Seiri; Or Sort, Throw Away What Is Not Needed • Seiton; Or Straighten, To Create And Maintain Order • Seiso; Or Shine, To Clean • Seiketsu; Or Standardize, To Develop Rules To Maintain The First Three S’s • Shitske; Or Sustain The Disipline
  47. 47. KAIZEN IS A DOING ACTIVITY • Full Time Job For The Week • Trying To Achieve Stretch Goals • Mixture Of Hourly And Salaried People • Hands On In The Gemba • Everyone Is Learning To See
  48. 48. TYPICAL RESULTS OF A ONE WEEK KAIZEN • Cut Lead Times 90% • Reduce Staffing From 10 To 5 • Reduce Inventory By 70% • Reduce Floor Space By 50% • Reduce Defects By 60% • Reduce Travel Distance By 90% • Cut Setup Time By 90% • Connect The Customer To The Shop Floor
  49. 49. KAIZEN FOCUS • Go After The Biggest Value Stream First • Create Model Lines Or Model Factories • Don’t Spread Out Your Efforts • Don’t Dabble – 2 Kaizens Per Week, Per Facility
  50. 50. KAIZEN REQUIREMENTS • Up Front Homework – Stretch Goals • Team Leaders – Co-Leaders • Owner Participation • Kick Off Meeting And Daily Leaders Mtgs • Wrap Up Meeting – Celebration • Publicize The Results To Everyone
  51. 51. LEADERS ROLE • Hands On – Out Front • Lead By Example • Learn By Doing • Drive Lean Fundamentals – No Other Option • Commit To Becoming A Lean Expert
  52. 52. LEADERS ROLE • Make The Case – Keep Making It • Set Stretch Goals • Push Through Problems • Overcome The “Lore” • Get Rid Of “Concrete Heads” • Don’t Allow Backsliding
  53. 53. MAKE THE CASE THE WALK OF SHAME
  54. 54. LEADERS ROLE • Establish Daily Management • Support Your People – Listen To Them • Everyone Is On Board – No Excuses • Align Your Resources – Hoshin Planning • Obtain The Lean Knowledge • Take All The “Leaps Of Faith”
  55. 55. LEADERS ROLE • Make It Ok To Fail • Hard To Get Hired – Hard To Get Fired • Go See – Understand Why • Start All Plant Visits On The Shop Floor • Always Leave Homework – Physical Actions • Ask Why – Not Who
  56. 56. LEADERS ROLE • Stop Managing Last Months Results • Be On 5-6 Full Week Kaizens Per Year • Your Managers Need To Be Enablers • Role Is More Player/Coach –Coach To Win • Consistency Is Key – Show Me The Data • Create The Future Leaders – Ohno Circle
  57. 57. MANAGE TO THE OPERATIONAL EXCELLENCE TARGETS 100% On Time Customer Service 20% Productivity Gain – Each Year 50% Reduction In Defects – Each Year 20x Inventory Turns Visual Control And The 5S’s WHAT DOES WINNING LOOK LIKE?
  58. 58. DUMP YOUR BAD HABITS • Standard Cost Accounting • Traditional Measurements • Big End Of Month Reviews • Lengthy Capex Reviews LOOK FORWARD NOT BACKWARD
  59. 59. SUMMARY “Byrne-san, If You Don’t Try Something No Knowledge Will Visit You” Chihiro Nakao

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