The document outlines a 7-week course on lean enterprise principles. Week 1 introduces lean management analysts and the course overview. Week 2 provides an overview of lean enterprise including its history, principles of lean, and defining value-added work. Additional weeks cover topics like running kaizen events, value stream mapping, 5S, supply chain management, and cultural change. Recommended readings are also included to further learning.

1. Presented by Joe Perillo
RIVA Lean Enterprise Overview
1

2. Course Overview
Week 1 (Slides 1 – 23)
 Introductions
 Course Overview
 What is a Lean management analyst
 Purpose and scope
 Using Lean as business advantage
Week 2 (Slides 24 – 42)
 Lean Enterprise Overview
Week 3 (Slides 43 – 59)
 Running a Successful Kaizen Event
Week 4 (Slides 60 – 73)
 Value-stream mapping
Week 5 (Slides 74 – 99)
 Basic 5-S Sort, Set in order, Shine, Sustain
 Sustainment and measurement
 Dash boards
Week 6 (Slides 100 – 120)
 Supply Chain management & Logistics
Week 7 (Slides 121- 152)
 Learning to see Through the Symptoms
 Servant Leadership and Leadership Influence
 True Cultural change 2

3. Recommended
Reading
 Lean Thinking, by Jim Womack
 Becoming Lean, by Jeffrey Liker
 The Machine That Changed the World, by Jim Womack and Daniel T. Jones
 The Goal, by Eli Goldratt
 World Class Manufacturing: The Next Decade, by Richard Schonberger
 All I Need To Know about Manufacturing I learned in Joe’s Garage by William B. Miller Vicki L.
Schenk.
 Good to Great by Jim Collins
 Leadership & the One Minute Manager by Ken Blanchard
 The 21 Irrefutable laws of Leadership By John C. Maxwell
 The 17 Indisputable Laws of Teamwork By John C. Maxwell
 The Servant, a simple story about the true essence of Leadership By James C. Hunter
3

4. What is a lean Management?
 lean management is
the facilitation of lean
principles by analyzing
a company’s
procedures to increase
safety, capacity and
quality thus improving
profitability through the
elimination of waste.
4

5. The Lean Thinker
5

6. Purpose & Scope
 Lean principles offer tangible solutions to
drastically cut waste, thereby improving quality,
productivity and profitability.
 The fundamentals of Lean embrace the
identification and elimination of waste throughout
the entire supply chain, ultimately resulting in a
more efficient business environment.
 This program teaches the fundamentals and
techniques of Lean management, and facilitates
the follow-up skills necessary to achieve successful
results from the shop floor to the top floor.
6

7. The Value of This Training
 Knowing how to eliminate waste
that will ultimately increase capacity
and reduce cost is a valued skill that
will make an organization stand out
from the crowd!
 You will learn a skill that can be
used in any area of the business.
 You will master the tools needed to
market yourself as a “problem
finder”. Be the person that can
break through company “silos” and
see the big picture!
7

8. Applying lean principles can achieve the following:
 Increase product or service availability “Capacity”
 Reduce customer turnaround time
 Process simplification
 Cost reduction
 Improve safety
 Improve quality
 Reduce inventory levels
 Reduce logistics costs
 Reduce space
 Reduce lead Time
 Improve supplier performance and accountability
 Improve customer satisfaction and customer
relationships
8

9. Using Lean Principle
to Achieve a Competitive
Business
Advantage
9
Competitive advantage happens when
an organization adopts methods that
allow it to outperform its competitors.
Dramatic Difference

10. Lean is Market Driven
Every morning in Africa, a gazelle wakes up. It knows it
must run faster than the fastest lion or it will be killed.
Every morning a lion wakes up. It knows it must outrun
the slowest gazelle or it will starve to death.
It doesn’t matter whether
you are a lion or a
gazelle—when the sun
comes up, you had better
be running.
10

11. The Challenge
 Both internal and external
Customers Want:
 Lower cost
 On time delivery
 Improved quality
 Stakeholders Want:
 Improved margins
 Job security
 Long term contracts
11

12. • How do you feel when customers and
stakeholders keep demanding more
from you, day after day?
• What strategies are you adopting to
meet these competitive challenges?
• Do you have the necessary skills and
resources to turn opportunities into
reality?
12

13. Stairway to Success
Leaders need to build
a Bridge to the future
Paradigm
Shift
13

14. Why do Lean companies view customer demands as opportunities?
Lean Growth
(leverage)
Lower cost
Better quality
On time delivery
Increase margins
Job security
Long term contract
Better
Than
Competitors
=
14

15. Turning Opportunity into Reality
Increased
Profits $
Minimum Increase to:
•Direct labor
•Inventory
•Overhead
•Investment
What is Lean Growth?
Lean Growth
(leverage)
=
What is the result?
15

16. What Is Leverage?
Current Cost Leverage Cost Leverage
Opportunity
Direct Labor &
Material
$1.00 $0.75 $0.25
Fixed O/H $1.00 $0.75 $0.25
Var O/H $1.00 $0.75 $0.25
Sales/General &
Administration
$1.00 $0.75 $0.25
Profit $1.00 $1.00
Total $5.00 $4.00 $1.00
You can keep the
savings or use it as
price leverage 16

17.  Create and communicate a vision that inspires
 Develop strategies that attain your vision
 Set measurable objectives that support your strategy
 Cascade the deployment of actions
 Implement lean tactics that activate your objectives
How do we Turn Opportunities into Reality?
“If it’s not lead it will not be followed”
17

18. Stairway to Success
Paradigm
Shift
Develop Vision &
Strategies that turn
opportunities into
reality
Take actions that
achieve results
Implement
Vision
Leaders need to build a
Bridge to the future
18

19.  Value Stream Mapping (VSM)
 Measures for success (PDCA)
 Quick changeover (SMED)
 Cellular manufacturing
 Standardized work
 Cross training employees
 Total Productive Maintenance (TPM)
 Office Kaizen
 Kanban (Signal Pull Systems)
What are Lean Tactics?
19

20. Change the culture within your area by training and
developing skills that support:
How do we Sustain the Gains?
•Changing roles & responsibilities
•Buy-in and dedication to vision
•Working in teams
•Being non-blaming & judgmental
•Communicate
•Establishing measures, setting objectives
•Instill accountability
•Allocating resources to achieve objectives
•Empowering others
"If you always do what
you always did, you
always get what you
always got." (Anon)
Definition of Insanity:
“Doing the same thing over
and over again and
expecting different results”.
(Albert Einstein)
20

21. Stairway to Success
Leadership needs to
build a Bridge to the
Future
Paradigm
Shift
Develop Vision &
Strategies that turn
opportunities into
realities
Vision
Take actions that
achieve results
Implement
Change your culture
Sustain Gains
21

22. Strategic Growth
22
1. Overt Benefit
Specifically, obviously,
directly- What’s in it for the
customer?
2. Real Reason to Believe
Why should the customer
believe you will deliver on
the promise of Overt
Benefit.
3. Dramatic Difference
How revolutionary and new-
to-the-world is your
benefit/reason to believe?

23. “The Awakening” The Death of TIM P. WOOD
23

24. Week 2
•Lean Enterprise Overview
24

25. LEAN ENTERPRISE
OVERVIEW
25

26. CLC
Continuous Improvement
 Lean Principles
 Six Sigma
 TPS Toyota Production
System
Leadership through Influence
 Servant leadership
Cultural Change
 Sustainment of
improvements
 Continuous improvement
Culture
 Servant leadership culture
26

27. 5 Principles of lean
 The five-step thought process for guiding the implementation of lean
techniques is easy to remember, but not always easy to achieve:
1. Specify value from the standpoint of the end customer by product
family.
2. Identify all the steps in the value stream for each product family,
eliminating whenever possible those steps that do not create value.
3. Make the value-creating steps occur in tight sequence so the product
will flow smoothly toward the customer.
4. As flow is introduced, let customers pull value from the next upstream
activity.
5. As value is specified, value streams are identified, wasted steps are
removed, and flow and pull are introduced, begin the process again and
continue it until a state of perfection is reached in which perfect value is
created with no waste.
27

28. Lean Enterprise
Flow
Flexible to Customer Demand
Balanced Work Flow
Demand Flow
Just-in-Time
Toyota Production System
28

29. History of Lean Manufacturing
1920’s1920’s
FordFord
1970’s1970’s
1920’s1920’s
FordFord 1970’s1970’s
ToyotaToyota
1990’s
LEAN
Manufacturing
2000’s
LEAN
Enterprise
‘Taiichi Ohno, Shigeo Shingo and Eiji Toyoda“
developed the TPS system between 1948 and 1975.
These men came to America and observed mass
production along with the assembly line. They also
observed how supermarkets operated.
29

30. Shortening the Production Cycle
“The longer an article is in the process of
manufacture and the more it is moved about,
the greater is its ultimate cost.”
Henry Ford, 1926
Henry Ford developed the
assembly line that
revolutionized mass production.
30

31. Defining Lean
“A systematic approach to identifying and Eliminating Waste (non-
value-added activities) through continuous improvement by flowing the
product at the pull of the customer in pursuit of perfection.”
The MEP (Manufacturing Extension Partnership)
Lean Network
“An organized war on waste.”
Lean has been defined in many different
ways.
31

32. Definition of Value Added
Value Added
Any activity that increases the market form or function of the product or
service. (These are things the customer is willing to pay for.)
Non-Value Added
Any activity that does not add market form or function or is not
necessary. (These activities should be eliminated, simplified, reduced,
or integrated.)
32

33. Internal vs. External Customer
 Internal Customer
 Anyone within an organization who at any
time is dependent on work that you do
within the organization
 External Customer
 The consumer of the product or service
outside of your organization
33

34. Establish Takt Time
Takt Time = Demand Rate
Takt Time =
Work Time Available
GOAL: Produce to Demand
2700 Seconds
120 Widgets
= 1 Widget every 22.5 SecTakt Time =
Cycle Time
Takt Time
= Minimum # of People
Number of Units Sold
34

35. Value Added Work
35

36. Examples of Waste
 Redundant Inspection
 Multiple Systems
 Excess Forms and Supplies
 Batching
 Downtime (Equipment breakdown)
 Searching for Paperwork (30s rule)
 Waiting for Instruction (Missing details)
 Excessive Transactions
When walking
through your
organizations what
do you see. 36

37. Leadership
Operational
Excellence
Strategy
Culture
Four Keys to the Lean Enterprise
The Relentless
Pursuit
of Perfection
• Model the Way
• Focus on the Future
• Empower Employees
• Vision is Set and
Continuously Shared
•Tactics Roll Up and Down
Through the organization
• Data Drives Decision Making
• Do What is Best for the Organization
• Accountability is Expected
Just like a table
needs four legs to
stand, lean requires
the four keys to be
effective and be
sustainable.
37

38. Lean Tools – Operational Excellence
 Continuous Improvement Events (Kaizen)
 Standard Work
 Visual Controls & Workplace Organization
 Value Stream Mapping
 5 Why’s – Root Cause Analysis
 Setup and Lot Size Reduction
 Production driven by TAKT time
 One Piece Flow
 Pull/Kanban Material Replenishment System
 Cellular Manufacturing 38

39. Kaizen
Kaizen is a Japanese philosophy of action which signifies change for the better.
• The word ‘Kai’ means to take apart and make new, while
• the word ‘Zen’ means to think about so as to help others
Kaizen is driven by two imperatives:
• Solve problems
• Eliminate waste (‘Muda’)
We apply Kaizen principles repeatedly to continually improve
the processes used everyday. Therefore:
Kaizen = Thoughtful Acts of Continuous Improvement 39

40. Document
Reality
Current State (VSM)
Plan
Countermeasures
Future State (VSM)
Identify
Waste
(Non value Added)
Reality
Check
Make Changes Verify Change
Measure
Results
Make this
the Standard
Celebrate
Do It
Again
In a week or less
Made a way of life
Kaizen Steps
40

41. Lean = Eliminating the Wastes
Value Added
Typically 95% of all lead time is non-value added
• Transportation
• Inventory
• Motion
• People (Underutilized)
• Waiting
• Overproduction
• Over-processing
• Defects
Non-Value Added
TIM P. WOOD
41

42. Lead Time Reduction
Productivity Increase
WIP Reduction
Quality Improvement
Space Utilization
0 25 50 75 100
Percentage of Benefits Achieved
Benefits of Lean
42

43. Week 3
•Kaizen Planning
43

44. Plan to Succeed
Passion Drives Success
Running a Successful Kaizen Event
44

45. Planning Represents Success
 Organizational
 Strategic
 Training
 Tactical
Enterprise
Event
25%
25%
25%
25%
100%
Every exclusion reduces chances of great Kaizen
45

46. Organizational
 Must answer the question
“WHY?”
 Prepare to answer “W.I.F.M?”
 Tie to Business Issues
 Develop Executive Buy-in
 Participates fully in Prep and
activity
46

47. Strategic
 Senior Management adopts
Kaizen philosophy
 Endorses “All hands on deck”
Support
 Delivers “W.I.F.M.?” and “WHY?”
answers.
 Participates actively in all phases
of Prep and activity
47

48. Training for the War on Waste
 No substitute for Hands On
 Allows team to focus on goals
rather than mechanics of
Kaizen
 Nuts & Bolts training of Roles
and Responsibilities
 Establish Kaizen Office and/or
methods
 Learning Kaizen process is as
critical as successes of first
Kaizen
48

49. Tactical Planning
 Where? How? When? Who?
 Eliminates barriers
 Creates Objectives, Targets, Metrics
 Construct Physical support and “Air
Cover”
 Structure supported: Kick off
meeting, Daily leaders meetings,
Final Presentation.
 Silo support: Maintenance,
Production etc.
49

50. Kaizen Timeline
KaizenEvent
Organization Prep
Strategic Prep
Training Prep
Tactical Prep
Follow up
50

51. Kaizen Event
 Life Cycle of the Event
 Kaizen Forms
 Event Structure
 Kaizen Fundamentals
51

52. Life Cycle of an Event
 Create Excitement
 Resolve Conflict
 Implement Resolution
 Celebrate Victory
52

53. Forms
 Profile, Target, Newspaper are Mainstay
 Permanent record
 Encourage compliance then creativity
 Guiding Documents
53

54. Kaizen Event Area Profile
Team # :
Event Description: Event Dates:
Preliminary Objectives: Team:
Production Requirements (Takt Time):
Facilitator:
Consultant:
Process Information: Current Situation and Problems
54

55. KAIZEN EVENT TARGET SHEET
Department Number: Team No.:
Department Name: Date:
Start Target 1st Day 2nd Day 3rd Day 4th Day
Space (Sq. Ft.)
Inventory (pcs)
Walking Distance (ft)
Parts Transport Distance
Throughput Time
Cycletime
Volume Per Day
Full-time Equivalent Crew
Productivity
Changeover (Total)
Schedule Attainment
Safety Improvements
Quality Improvements
Remarks:
55

56. 56

57. Structure
 Leader has Accountability and is
responsible for event progress
 Management participates
 Cross functional contribution
 Kickoff Meeting, Daily meeting, Final
Presentation
 Event closeout
57

58. Fundamentals
 Bias towards Action
 Focus on Gemba “shop floor, place of event
etc…”
 Drive Objectives, Park others
 Ask “WHY?” 5 times
 Try-storm, not brainstorm:
1. It is not important to create perfect solutions.
2. Be action-oriented.
3. Keep solutions simple.
 Leave very few Newspaper Items
58

59. Important
 Create and implement structure to
support Follow up
 Make MUDA “waste” the enemy
 Debrief the event
 Build on successes
59

60. Week 4
•Value Stream Mapping
60

61. Value-Stream Mapping
61

62. What is a Value Stream
A Value Stream is the set of all actions (both
value added and non value added) required to
bring a specific product or service from raw
material through to the customer.
• “Whenever there is a product
(or service) for a customer,
• there is a value stream. The
challenge lies in seeing it.”
62

63. “The purpose of a Value Stream Map is to identify
What’s going on and where it’s going wrong”
Joe Perillo
63

64. Value Stream Map
 One of the most important tools of a
lean management analyst is the
process of value stream mapping.
 A value stream map outlines in detail
every step of the process in its current
state by documenting material and
information flows.
 This allows the team to visually see
the non value added waste within the
process.
 Once the waste has been identified,
action plans are established to reduce
or eliminate the waste thus improving
the efficiency of the process.
64

65. Value Stream Mapping Process
 Follow a “product” or “service” from
beginning to end, and draw a visual
representation of every process in the
material & information flow.
 Then, draw (using icons) a “future
state” map of how value should flow.
65

66. Using Value Stream Mapping
Visual representation of how
material and information
flows in the business today
Product family
Current state
drawing
Future state
drawing
Plan &
Implementation
Drawn using lean principles
Current State -
Invoice Payment
Future State –
Coax Line
66

67. Levels of a Value Stream
Process Level
Single Location
(door to door)
Multiple Facilities
Across Companies
Start Here
67

68. Types of Value Stream Maps
 A typical value stream
map will outline every
step in the process
from customer order to
delivery of a product or
service.
7:35
68

69. Current State Mapping
 Completed in 1-3 days depending on the complexity of the
process being mapped
 Performed by a cross functional team of individuals that
perform steps within the process being evaluated
 Resulting in a picture along with team observations of
what we “see” when following the product or service
69

70. Future State Mapping
 Completed in 1-3 days with the same team
 Focused on:
 Creating a flexible, reactive system that
quickly adapts to changing customer needs
 Eliminating and reducing waste
 Creating flow
 Producing and delivering on demand
70

71. Value Stream Managers
“A.K.A. Lean Management Analyst”
Each Value Stream needs a Value Stream Manager
The conductor of implementation:
•Focused on system wins
•Reports to the top dog
Process 1 Process 2 Process 3
“Customer”
The Value
Stream Manager
Kaizen
71

72. Don’t Wait!
You need a plan!
• Tie it to your business objectives.
• Make a VS Plan: What to do by when.
• Establish an appropriate review frequency.
• Conduct VS Reviews walking the flow.
Planning and Implementing
72

73. The Five Step Value Stream Process Review
1. Specify value from the standpoint of the end
customer.
2. Identify all the steps in the value stream and
eliminate whenever possible those steps that do
not create value.
3. Make the value-creating steps occur in tight
sequence so the product or service will flow
smoothly toward the customer.
4. As flow is introduced, let customers pull value
from the next upstream activity.
5. As value is specified, value streams are
identified, wasted steps are removed, and flow
and pull are introduced, begin the process
again and continue it until a state of perfection
is reached in which perfect value is created with
no waste.
73

74. Week 5
•Basic 5-S
1.Sort, 2.Set in order, 3.Shine, 4.Standardize & 5.Sustain
•Sustainment and measurement
•Dash boards
74

75. BASIC 5-S SORT, SET IN ORDER, SHINE,
STANDARDIZE & SUSTAIN
75

76. Definition
• Sort out necessary and unnecessary items.
• Store items used frequently at the work area, infrequently
used items store away from the work area, and dispose of items
that are not needed.
Why
• Gain Space
•Easier to visualize the process
• Safer work area
•Remove waste “Muda”
Remember
• Sort though all items in one area.
• Red tag items which can not be removed right away.
• Make sure everyone in the area agrees that an item should be
removed.
• Make sure reasons for keeping items are viable.
Examples
• Many documents in the work area are never
used. Remove them.
• Crowded offices often have blocked aisles,
making the space feel confined. Open up the
aisles. Are the items needed?
• Extra furniture contributes to the clutter.
Remove unused furniture.
SORT (Decide on what is needed)
76

77. SET IN ORDER
Definition
• Arrange all necessary items.
• Designate areas for all items.
• A place for everything and everything in its place.
Why
• Eliminate searching for items.
• Visually show what is out of place.
• Make it easier to do the work required.
Remember
• Use labels, signs, tape, & shadows to make it easy to locate
items.
• Items which are used together, should be kept together.
• Locate sharable items in a central location.
• It should be easy to find everything.
Examples
• Label filing cabinets to make it easier to find
files.
• Items have good visual controls.
• Keep only the amount you need at the work
station.
(Arrange needed items for ease of use)
77

78. Set in Order –
Shadow board used for those frequently used tools
78

79. Results of Sort and Set In Order:
After:Before:
No organization leads to
missing tools and
equipment. Time to search
for correct tool is pure
waste.
Tools are now
organized and
labeled for quick
retrieval. Each tool
has a designated
area for storage.
79

80. SHINE (Cleanliness)
Definition
• To keep the area clean on a continuing basis.
Why
• To keep area from getting dirty in the first
place, so we don’t have to clean it up
afterwards.
• A clean workplace is nicer to work in.
• A clean workplace is indicative of a quality
product and process.
• Dust and dirt cause potential health problems
and many people have allergies to them.
Remember
• Clean all areas, including cabinet top and insides.
• Vacuum / Dust / Mop / Paint
Examples
• Equipment and furniture should look “like
new”
• All documents should look like they were
just posted or printed.
80

81. Shine – Clean and inspect. Team members cleaning target areas.
81

82. STANDARDIZE (Maintain the first 3S’s)
Definition
• To maintain guidelines - Sort, Set In Order, Shine
Why
• Prevents regression back to an unclean /
disorganized environment.
• Eliminates the need for “Special Clean-up
Efforts”
Remember
• Develop schedules and checklist.
• Evaluate the areas using the 5S ratings.
• Continually improve neatness
Examples
• Maintain furniture and equipment by using
schedules.
• 5S Ratings posted and continually updated.
82

83. The 3 Elements of Standardized Work
1. Takt time, which is the rate at which
products must be made in a process to
meet customer demand
2. The precise work sequence in which
an operator performs tasks within Takt
time
3. The standard inventory, including units
in machines, required to keep the
process operating smoothly 83

84. Standard Work
A picture is worth a thousand words 84

85. SUSTAIN (Disciplined Culture)
Definition
• To maintain discipline, we need to practice and repeat until it
becomes a way of life.
• Always look for ways to improve your area.
Why
• To build ‘housekeeping” into the everyday
process.
• To keep from falling back to the unclean /
unorganized area that use to exist.
Remember
• Training everyone is vital.
• Involvement from all is necessary.
• Commitment and discipline toward 5S is essential in taking
the first step to being World Class
Examples
• Everyone keeps their furniture, equipment,
supplies organized and spotless daily.
• Always look for ways to do things easier and
more efficiently.
85

86. Sustainment and Measurement
86

87. Business Evaluation
 Are you measuring your business
 What are you measuring
 How are you measuring
 When are you measuring (before, during or after
it happens).
 What are you doing with the
information
87

88. What Are You Measuring
 Voice of the customer
 Customer satisfaction
 On time delivery (Perfect Order)
 Scrap or salvage
 Daily Unit Orders/Back Log
 Fill Rate or Availability
 Revenue
 Cost
 Profit
 Productivity
 Quality
 Inventory turns and value
 Standard work
 Visual controls
 Preventive and predictive maintenance
 Lead times
88

89. Definition of the Perfect Order
1. The Right Product
2. In the Right Quantity
3. From the Right Source
4. To the Right Destination
5. In the Right Condition
6. At the Right Time
7. With the Right Documentation
8. For the Right Cost. 89

90. Four Elements that Effect Overall Business Performance
1. Financial burdens, shortcomings, overhead,
costs and revenue.
2. Customer satisfaction (perfect order index)
3. Understanding business educational needs
and keeping up on the technology
surrounding your business
4. Continuous improvement, maintaining
optimum efficiency and the elimination of
waste or non value added activities
90

91. Measuring Your Business
 Implement lean tactics that achieve the objectives by prioritizing the lean
efforts for the greatest gains.
 Establish metrics that incorporate lean initiatives that drive the
organization to achieve the objectives.
 Work in effectively in cross functional teams
 Governance—establishing organizational structures that will accelerate
the rate of decision-making within your company.
 Roles and responsibilities—defining divisions of responsibilities to
intelligently balance resources for organizational change with capabilities
and knowledge.
 Performance management and incentives—implementing effective new
systems of organizational change measurement, feedback, and
compensation to identify and reward the true drivers of performance at the
individual, functional, and corporate level.
 Organizational structure—streamlining reporting and management
structures and ensuring they are suitable for your decision-making
processes and targeted measures of success.
91

92. “Dashboards”
92

93. Maximizing Results Via Metrics
 To maximize the effectiveness of the organization’s
efforts,
it is necessary to have:
 Clear, high-level goals,
 The means to make those goals meaningful to
persons throughout the organization, and
 A system to review and modify goals at all levels as
the situation evolves.
 The basis for this system is the metric.
Show me how a person or organization is measured,
and I’ll tell you how the person/organization is behaving.
93

94. Dashboards Definition
 “Dashboards” are a compilation of standardized performance
measures. These measurements are designed to:
 Facilitate achieving objectives
 Provide feedback
 Enable learning
 Dashboard measurements should accomplish each of the above at
all levels of the company.
 They should be clearly defined, simple to produce, and easily
understood by users.
 Dashboards are the tactical tool used to measure and track project
performance.
94

95. Management of Goals:
 Dashboards – Used to measure and track performance to meet
operational goals.
 Determine key performance indicators in four areas which cover
the past, present and future of the firm:
 Financial – Share price, sales, profits, return on investment.
 External – Customer satisfaction “On Time Delivery”, warranty
returns, repeat orders, market share.
 Internal – Business process performance, operational efficiency,
scrap rates, R&D cycle times, employee turnover.
 Learning and Growth – Staff training, suggestions made and
implemented, percentage of work hours working in teams.
95

96. Dashboards Should...
 Be well integrated, ensuring that every level
of the organization has metrics that support
the goals and strategies of the entire
enterprise
 Drive accountability for achieving goals
throughout the organization
 Be well-balanced – measuring improvement
in multiple, balanced metrics to ensure
driving the right behavior
96

97. Dashboard Measurements
 Characteristics of a Good Measurement:
 Specific
 Measurable
 Achievable and Verifiable
 Realistic
 Timely
97

98. Dashboards need to meet your
business requirements
Develop dashboard metrics that will meet the
business requirements depending on the complexity
or simplicity of your organization.
98

99. Dashboards communicate symptoms.
If goals are not being met, you need to find the
cause and resolve it!
99

100. Week 6
•Supply Chain Management
100

101. Supply Chain Management & Logistics
Opportunities for
Continuous Improvement
101

102. SSupplyupply CChainhain MManagementanagement
 Supply Chain (SC): the sequence of
organizations - their facilities, functions, and
activities - that are involved in producing
and delivering a product or service
 Facilities include warehouses, factories,
processing centers, distribution centers,
retail outlets, and offices
Sometimes referred to as value chains
102

103. The goal of every firm should be to maximize the
financial and service performance of the company.
In order to do that, you need to make sure you’re focusing in on your
customers with the right strategies in a specific sequence.
Focus on the customer through the service strategy, this means supporting
the current and perspective customers.
 Maximizes the service objectives that meet the financial goals of the firm.
 Make sure you have the right inventory strategy- and that strategy lines
up with the Customer Service Strategy.
 The Production Strategy utilizing lean principles that also incorporate the
cultural impact on the people within the organization.
 The Procurement Strategy that supports the production strategy.
 The Logistics Strategy that supports the internal and external customer.
 The Distribution Strategy that supports the external customer.
All these strategies prioritized in that order must align with the financial and service objectives of the
company that will meet the perfect order metric. There is an order to going about addressing each one so
they line up making sure the performance measurements provide feedback in making sure these strategies
line up. 103

104. Is the firm meeting the perfect order metric?
 The Right Product in the
 Right Quantity to the
 Right Destination in the
 Right Condition at the
 Right Time with the
 Right Documentation for the
 Right Cost.
Most companies only focus on one and then try to optimize that area
alone, forgetting that they must all fit and be aligned. 104

105. Leaders need to ask themselves these
questions.
 Is the customer satisfied with the level of
service they are receiving?
 What improvements have we made to
improve the area that does not meet the
customer’s level of service requirements
or the financial goals of the firm?
105

106. TTypicalypical SSupplyupply CChainshains
Purchasing
Receiving Storage Operations Storage
Production Distribution
106

107. TTypicalypical SCSC for afor a MManufactureranufacturer
Supplier
Supplier
Supplier
Storage
}
Mfg. Storage Dist. Retailer Customer
107

108. Supplier
Supplier
}Storage Service Customer
TTypicalypical SCSC for afor a SServiceervice
108

109. 1. Improve operations
2. Increasing transportation costs, globalization,
and increasing levels of outsourcing
3. Competitive pressures
4. Increasing importance of e-commerce
5. Manage inventories: Bullwhip effect
NNeed foreed for SCSC MManagementanagement
109

110.  Buying goods or services instead of
producing or providing them in-house
 Benefits – better, cheaper, or more efficient
materials, parts, or services; expertise and
knowledge; added flexibility
 Risks – loss of control; greater dependency;
loss of the ability to perform in-house
OOutsourcingutsourcing
110

111. GGloballobal SSupplyupply CChainshains
 Increasing more complex
 Language
 Culture
 Currency fluctuations
 Political
 Transportation costs
 Local capabilities
 Finance and economics
 Environmental
111

112. EElements oflements of SCSC MManagementanagement
Deciding how to best move and store materialsLogistics
Determining location of facilitiesLocation
Monitoring supplier quality, delivery, and relationsSuppliers
Evaluating suppliers and supporting operationsPurchasing
Meeting demand while managing inventory costsInventory
Controlling quality, scheduling workProcessing
Incorporating customer wants, mfg., and timeDesign
Predicting quantity and timing of demandForecasting
Determining what customers wantCustomers
Typical IssuesElement
112

113.  Movement of materials, services, cash, and
information in a SC. Major issues:
 Movement within a facility
 Incoming and outgoing shipments
 Traffic management
 Distribution requirements planning (DRP)
 A system for inventory management and
distribution planning
 Third-party logistics (3-PL)
 The outsourcing of logistics management
 Reverse logistics
LLogisticsogistics
113

114. MMovementovement WWithin aithin a FFacilityacilityRECEIVING
Storage
Work
center
Work center
Work center
Storage
Work
center
Storage
Shipping
114

115. EEffectiveffective SSupplyupply CChainhain
 Requires linking the market, distribution channels
processes, and suppliers
 Supply chain should enable all participants in the
chain to achieve significant gains:
 Share forecasts
 Determine the status of orders in real time
 Access inventory data of partners
 E-procurement is becoming increasingly common
115

116. SSuccessfuluccessful SSupplyupply CChainhain
 Trust among trading partners
 Effective communications
 Supply chain visibility
 Event-management capability
 The ability to detect and respond to
unplanned events
 Performance metrics
 The SCOR model reflects an effort to
standardize measurement of supply chain
performance 116

117. SSupplyupply CChainhain MMetricsetrics
Perspective Metrics
Reliability On-time delivery
Order fulfillment lead time
Fill rate (fraction of demand met from stock)
Perfect order fulfillment
Flexibility Supply chain response time
Upside production flexibility
Expenses Supply chain management costs
Warranty cost as a percent of revenue
Value added per employee
Assets/utilization Total inventory days of supply
Cash-to-cash cycle time
Net asset turns
117

118. CPFRCPFR
 Collaborative Planning, Forecasting, and
Replenishment (CPFR): A supply chain initiative that
focuses on information sharing among supply chain
trading partners
 For purposes of planning, forecasting, and
inventory replenishment
 Incorporates key information such as promoting
timing and supply constraints
 Forecasts can be frozen and then converted into a
shipping plan, eliminating typical order processing
118

119. 1. Develop strategic objectives and tactics
2. Integrate and coordinate activities in the
internal supply chain
3. Coordinate activities with suppliers with
customers and planning and execution
across the supply chain
4. Form strategic partnerships: Two or more
business organizations that have
complementary outputs join so that each
may realize a strategic benefit
SSteps inteps in CCreating anreating an EEffectiveffective SCSC
119

120. SSupplyupply CChainhain PPerformanceerformance DDriversrivers
 Quality
 Cost
 Flexibility
 Velocity
 Inventory velocity: The rate at which inventory
(material) goes through the supply chain
 Information velocity: The rate at which
information is communicated in a supply chain
 Customer service
120

121. Week 7
•Learning to See Through the
Symptoms
•Leadership Through Influence
•Cultural Change
121

122. Learning to See Through the
Symptoms
“Find the Root Cause”
122

123. 5 Whys
 Often, just like a doctor, we see
symptoms (fever, nausea).
 To get to the underlying cause (the
disease) or the “root cause”, we need
to ask the question “Why” 5 times.
123

124. 5 Whys Example
Problem Statement:
You are on your way home from work and your
car stops in the middle of the road
What are some solutions to this problem?
124

125. 5 Whys Example
Problem Statement:
You are on your way home from work and your car stops in the
middle of the road
1. Why1. Why did your car stop?did your car stop?
- Because it ran out of gas.- Because it ran out of gas.
2. Why2. Why did it run out of gas?did it run out of gas?
- Because I didn't buy any gas on my way to work.- Because I didn't buy any gas on my way to work.
3. Why3. Why didn't you buy any gas this morning?didn't you buy any gas this morning?
- Because I didn't have any money.- Because I didn't have any money.
4. Why4. Why didn't you have any money?didn't you have any money?
- Because I lost it all last night in a poker game.- Because I lost it all last night in a poker game.
5. Why5. Why did you lose your money in last night's poker game?did you lose your money in last night's poker game?
- Because I'm not very good at "bluffing" when I don't have a good hand.- Because I'm not very good at "bluffing" when I don't have a good hand.
125

126. Follow the Symptoms to the Root Cause
 A woman meets with her
Doctor to address a pain
in her shoulder.
 The Dr attributes it to
normal aches and pains
and prescribes a pain
reliever.
Question:
 Did the Dr treat the
symptom or the cause? 126

127. Follow the Symptoms to the Root Cause
 By seeing through
the symptoms the
Dr could have
asked several
questions that
would have lead to
the cause of the
pain.
127

128. Root Cause Analysis
Why do sales drop off at a specific time of year?
 A grocery store located in the upper Midwest could
not understand why at a certain time every winter
sales plummeted. They studied their product line and
interviewed customers. They did everything possible
to uncover the mystery. Finally, someone made a
remarkable discovery that changed everything.
128

129. Follow the Symptoms to the Root Cause
 It seemed that whenever it was really cold outside, the
manager raised the temperature in the store. When
customers came into the store it was too warm for
them, so they removed their coats and placed them in
their shopping carts. This meant less room for food and
resulted in reduced sales overall. They lowered the
temperature of the store, and as a result, the sales
climbed back to the levels they were accustomed to.
Their adjustment resulted in restoring sales levels.
129

130. Be Patient
 As you walk through your plant, waiting room, service
area, purchasing department, accounting department
etc…
 Look through the symptoms of waste such as rejects,
waiting, unnecessary movement, long lead times,
poor customer satisfaction etc…
 These are opportunities for continuous improvement
but we will miss the chance to solve the root cause if
we stop short at only fixing the symptoms.
130

131. LEADERSHIP THROUGH
INFLUENCE
131
Servant Leadership

132. Servant- Leadership Defined
 Servant leadership is defined as an
approach to leadership development, which
emphasizes the leader’s role as steward of
the resources (human, financial and
otherwise) provided by the organization.
 It encourages leaders to serve others while
staying focused on achieving results in line
with the organization’s values and integrity.

133. Servant Leader
A servant leader serves constituents by
working on their behalf to help them achieve
their goals, not the leader’s own goals.
 Places service before self-interest
 Listens first to express confidence in others
 Inspires trust by being trustworthy
 Focuses on what is feasible to accomplish
 Lends a hand
 Provides tools

134. Servant Leadership
 Continuous improvement or lean tools are important foundational strategies,
but they can't deliver effective or sustainable results unless we establish an
organization that promotes a continuous learning environment.
 This requires leaders with a teachable spirit or leaders that want to create a
safe environment that promotes problem solving through experimentation.
 Creating this kind of environment in an organization changes the role of a
leader from boss to teacher, from manager to coach or as some would call,
a servant leader.
 If you review the role of a leader you can see that they serve the people
they lead by giving them the tools, resources, support, direction and vision
that ultimately reach the customer.
 This type of leadership creates an organization that is continually learning
along with developing and organization of problem solvers.

135. Ten Characteristics of Servant Leadership
Listening
Empathy
Healing
Awareness
Persuasion
Conceptualization
Foresight
Stewardship
Commitment to
growth of others
Building
Community
Larry Spears, director of the Robert K Greenleaf
Center for Servant Leadership, identified ten
characteristics.

136. Commitment to the Growth of Others
 Servant-leaders believe that people have
an intrinsic value beyond their tangible
contributions as workers.
 Servant-leaders are deeply committed to a
personal, professional, and spiritual growth
of all individuals in the organization.
 As we grow the organization, there is still a
need to build a sense of community.

137. “Leadership Through Influence Rather than Influence Through Leadership”
Joe Perillo
 There is a saying, “it is far
more impressive to see a
flock of sheep following a
lion rather than a lion
following a flock of sheep”.
137

138. The Law of Influence
 What platform have you built for
performance?
 What is your track record?
 What daily actions enhance your ability to
influence your organization?
 Leadership Lesson:
 “True leadership cannot be awarded,
appointed or assigned. It comes from
influence.”
“The True Measurement of Leadership Is Influence – Nothing More, Nothing Less”
138

139. Leadership Through Influence
 Leadership is a complex function, as a leader you are many things to many people with
different needs and abilities. Leading people with these challenges requires skills that
do not always come naturally and in some cases the skills you learned will not get you
to the next level of success.
 Your past success has gotten you to where you are. To get to the next level
requires learning new skills, mastering new things. And as a leader the way we
ultimately become successful is by getting greater results from those we lead.
 The same way a football coach can’t win a game by themselves we see clearly to be a
successful leader we must become great coaches of others.
 Zig Ziglar may have said it best: “You can get anything in life you want, if you are
willing to help enough other people get what they want.”
 Leadership and coaching go hand in hand when working with people to accomplish a
goal or task. As you develop others you help them get the job satisfaction, peace of
mind, security that comes with greater skills, and opportunities. As a leader and a
coach we must encourage, persuade and support.
 The leadership through influence philosophy blends the role of leader and coach as you
lead as a lean management analyst so you can be successful by helping others
become more effective and efficient. 139

140. “DON’T LET WHAT YOU KNOW GET IN
THE WAY OF YOUR GROWTH”
140
Joe Perillo

141. Manager vs. Leader
 For many people in business,
obtaining a master's degree
has been instrumental in their
career achievements.
 However, some masters degree
curriculums teach people how
to be managers, not how to be
leaders.
 The problem is that almost all
continuous-improvement efforts
require leaders, not managers.
141

142. Developing Lean Leaders
 It is the behavior of leaders that matters since they create the culture.
 Leaders develop and communicate the vision that shape the
environment of the organization and the way it operates.
 Developing leaders who will sustain, support and build a lean culture
involves training and developing leaders who have influence.
 The “Leadership through influence rather than influence through
leadership” model teaches that true cultural change can only happen
when people follow leaders who lead by example.
 Lean is more than just improving operations. It is every step between
the customer and order fulfillment.
 Often considerable value can be achieved by applying lean principles
but true cultural change comes from a coordinated leadership
approach to bring it all together.
142

143. Four Foundational Pillars
Leaders
 Model the Way
 Focus on the Future
 Empower Employees
Strategy
 Vision is Set and Continuously Shared
 Tactics Roll Up and Down Through the organization
Culture
 Data Drives Decision Making
 Do What is Best for the Organization
 Accountability is ExpectedOperational Excellence
 The relentless pursuit of perfection
1.Leadership (Model the way, Provide Support, Have a Servant Attitude)
2.Culture (Continuous improvement attitude)
3.Operational Excellence (Perfect order, on time delivery & inventory management)
4.Strategic Vision (Provide the vision, set the course, follow-up and follow Through)
143

144. The Importance of Culture
in a Lean Transformation
144

145. Cultural Change
 Achieving true cultural change one has to be
committed to being teachable and driven to create an
environment of continuous improvement.
 To implement lean or anything associated with
business process improvement requires leaders who
are honest with themselves and the people they lead
 In general people are comfortable with not changing,
they are happy with the “status quo” its easer not
having to confront or challenge current practice.
 Your challenge will be to influence cultural change
through your actions as a leader.
145

146. “Culture Shock”
 As a lean leader you will be challenged to lead
diverse groups that are either just starting out
with little experience or have many years of
experience.
 In each circumstance they bring their own
unique set of challenges one of which is a
cultural shock
146

147. Changing the Culture
 As you begin your lean journey you will encounter two realities when taking on lean
transformation.
1. The first involves the physical changes that help reduce waste.
2. The second involves the changing of the existing culture.
 Experienced lean practitioners understand that making physical changes in the
reduction of waste is much easier than changing the cultural landscape of an
organization.
 Sustainability is the key to long term effectiveness and the only way we can achieve
sustainability is by changing the culture.
 Creating a new standard of how people approach a challenge or a problem even how
they work. The change in culture also applies to how people approach each other and
how they communicate.
 Measuring organizational performance will change the focus from the individual to the
entire team.
 A continuous improvement culture requires more than just going through the motions of
a physical plant layout or process changes, it requires a change in how we approach
everything we do. 147

148. “Is There a Better Way”
 One of the eight wastes is the underutilization of people. In a
traditional operation the culture usually pushes the ideas from
management down to the front lines. In a lean culture the ideas are
coming from the experts who do the job every day.
 Management is responsible to create an environment that allows for
ideas to flow freely in a non threatening environment even when
mistakes are made.
 Management is responsible for creating a culture that drives the
entire organization to ask the question “Is there a better way”
 Once we begin asking the questions “Is there a better way” it is the
responsibility of management to create the vision and support all
efforts that will help the organization succeed.
148

149. Teachable Spirit
 At the heart of any change is the individual with
a teachable spirit, without it change will not
happen because the individual believes his or
her way is best.
 The basic principle of continuous improvement
is that perfection is pursued and not achieved.
 If perfection is achieved it is short lived due to
changes in technology, material and customer
requirements.
149

150. Breaking Records
 World records are
achievements of perfection
but records were meant to
be broken, history has
proven this time and time
again.
 Individuals who set out to
break these records,
challenged the status quo
by confronting the methods
of achieving a new world
record by becoming faster
and stronger.
150

151. “An organization that lacks leaders with a
teachable spirit cannot influence true
cultural change”
Joe Perillo
151

152. 152