The document discusses Hoshin Kanri, a strategic planning process used by Toyota to align goals from top-level management down to the shop floor level to foster continuous improvement. It provides an overview of Hoshin Kanri, compares it to traditional strategic planning, and shares results from surveys that found Hoshin Kanri helps with goal alignment, execution, and engagement across organizations. The document also discusses how Hoshin Kanri can help procurement professionals address their key challenges.

1. S
Hoshin Kanri
Harnessing the Collective Thinking of All Employees:
to Deploy Policies that Operationalize Strategic Goals and
to Operationalize the New Role of Procurement
ISM – Dallas, TX
October 8, 2015
Dennis M. Gawlik
Faculty – Sustainable Operations
The Pinchot University –
Bainbridge Graduate Institute

2. Toyota’s 50 Year Vision
S We will lead the way to the
future of mobility,
enriching lives around the
world with the safest and
most responsible ways of
moving people.
S Through our commitment
to quality, constant
innovation and respect for
the planet, we aim to
exceed expectations and
be rewarded with a smile.
S We will meet our
challenging goals by
engaging the talent and
passion of people who
believe there is always a
better way.

3. Current Strategic Planning
Process’ Ailing Symptoms
S Does the business you
work with experience
any of these common
business problems?
S Many competing initiatives /
goals / priorities that do not
ever seem to get
implemented?
S Spending a great deal of
time in unproductive
meetings?
S Slow to respond to changing
customer needs / concerns?
S Disengaged employees?
S If yes, it may be due to
the planning process
your business uses.

4. Traditional Planning Process
S Traditional Planning Process:
S Strategic planning is an organization’s process of
defining its long-term strategy, or direction, and making
decisions on allocating its resources to pursue this
strategy.
S It involves setting goals, determining actions to achieve
the goals, and mobilizing resources to execute the
actions.
S A strategy of Management by Objective (MBO)
describes what ends/goals needs to be achieved.

5. Drawbacks of
Traditional
Planning
Processes
• Ends (results) vs.
Means (how)
• Reactive vs.
Proactive
• Top-Down Driven

6. Hoshin Kanri
The Toyota Way
S Hoshin Kanri:
S In Japanese, (方針管理), Hoshin means "compass needle"
or "direction". Kanri means “control” or “management”.
S A method devised to capture and cement a strategic
goal(s) as well as flashes of insight about the future, and
develop the means to bring these into reality.
S This method aligns an organization toward accomplishing
a single goal or a strategic plan in a way that creates
organizational flexibility to adapt to marketplace
conditions and changes for long-term success.

7. The Lean Leadership Development Model
3 Support Daily Kaizen
Make improvement a daily
routine
2 Coach and Develop
Others
1 Commit to Self Development
Learn a systematic improvement
pattern through repetition
TRUE NORTH
VALUES
Challenge
Kaizen Mind
Go and See
Teamwork
Respect
P
D
C
A
P
D
C
A
P
D
C
A
4 Create Vision and
Align Goals
Align improvement goals
vertically & horizontally
P
D
C
A
Coach others on the
Improvement pattern
Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015,
Figure 7-1. The Lean Leadership Development Model (we are focusing on step

8. Hoshin Kanri is a Top-Down and Bottom-Up
Learning Process
Company
Goal
Company
Hoshin
Division Hoshin
Department Hoshin
Individual Priority
Horizontal Alignment
On Job Development
Problem Solving
VerticalAlignment
Deploy the plan
(Catchball)
Implement
the plan
Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015,
Horizontal and Vertical Alignment

9. CEO, Group
President, EVP
Monthly
Who Frequency
Group VP,
Operations Director
Weekly
Who Frequency
Plant Manager Daily
Who Frequency
Area Manager Every Shift
Who Frequency
Team Leader Hourly
Who Frequency
Production Line
Production Area
Regional
Operations
Plant Level
Exec
Mgmt.
Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical
Guide: 2015, Figure 7-11. Standard Meetings by Responsibility and
Frequency
Frequency of Planning

10. What you see:
Visual Metrics Aligned from Top to Bottom
to meet Annual Plan
Hoshin
Vision
Floor Management Development System:
Trim Group 1
Main KPIs
Process
KPIs
Sub-KPIs
Safety Qualit
y
Productivit
y
Cost HR
.....
Trim Shop
Assembly Division I
Plant-Wide
Trim 1 Trim 2 Trim 3 Trim 4
Door Trim Chassis Final
Stamp Body Paint Assembly
.....x
x
x
x
x
.......... X
X X
X
ProblemX
.....
Shop KPIs
Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015,
Visual Boards that Align top-level Plan to Shop Floor Metrics

11. S
Hoshin
Vision
Floor Management Development System:
Trim Group 1
Main KPIs
Process
KPIs
Sub-KPIs
Safety Quality Productivity Cost HR
. . . . .
. . . . .x
x
x
x
x
. . . . .. . . . . X
X X
X
ProblemX
. . . . .
Shop KPIs
Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide:
2015, Floor Management Development System Board

12. Attributes of
Hoshin Kanri
• Align shared improvement
goals both vertically and
horizontally within the
organization
• ‘Means’ Focused
• Customer / Business Centric
• Builds Employee Ownership
• Execution at All Levels
• Proactive / Flexible
• Periodic Follow-Up & Review
• Reflection / Learning
Organization
• Inclusive in Approach

13. Comparison between Management By
Objective (MBO) and Hoshin Kanri
Management by Objectives Hoshin Kanri
Short-Term, No Philosophy Long-Term, Strong Guiding Principles
Results Oriented Evaluation of
Effort
Concerned with Results and Process
with Focus on People Development
Top down
Communication
Top down Direction Setting and Bottom-
up flow of Information and means
Directive Participative
Primarily Authority Oriented Primarily Responsibility Oriented
Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015,
Figure 7-7: Comparison between Management by Objectives and Hoshin

14. Survey
Background:
• Examined Strategic Planning
& Hoshin Kanri Planning
Processes
• Mid-Size & Large
Organizations
• Middle & Upper-Management
• 273 Surveys Sent Out
• 64 Surveys Received Back

15. How often is Strategic Planning Conducted?
Annually
I do not
Know
Monthly
Quarterly
Semi-
Annually
71%
14%
8%
4%
3%
Sample Size: 273 Surveys 64 Returned

16. Satisfied With
Process?
S 68% - Indicated that
Their Strategy was
Not Successful or
Neutral
S 32% Indicated that
Their Strategy was
Extremely or Quite
Successful
Extremely Dissatisfied
Quite Dissatisfied
Somewhat Dissatisfied
Neither
Extremely Satisfied
Somewhat Satisfied
Quite Satisfied
Sample Size:
273 Surveys
64 Returned
68% Not Satisfied
with Process
32%
Satisfied
with Process

17. Components of a
Successful
Strategy
S Strong Upper
Management
Support Needed
S Leadership Buy-In
S Meets Priorities
S Helps Achieve
Strategic
Objectives
2 Way
Communication
6%
Compelling Reason
5% Continual
Improvement
6%
Empower Others
5%
Improvement
Projects
5%
Leadership
Buy-in
13%
One Strategy
5%
Right Culture
7%
Support
Upper
Mgmt.
34%
Sample Size: 273 Surveys 64 Returned

18. S Management’s Role in
Hoshin Kanri:
S Set Clear Objectives 33%
S Develop & Coach 24%
S Goal Flow-down 14%
S Break-through Strategies 10%
S Solve Major Problems 10%
S Why Use Hoshin
Kanri?
S Difficult to track
Progress to Plan
27%
S Organizational Goals
Confusing
26%
S No Plan Continuity
18%
S Misinterpretation of
Direction
12%Sample Size: 273 Surveys, 64

19. Pre-Existing Conditions Prior
to Adopting Hoshin Kanri
Sample Size: 273 Surveys, 64
0 2 4 6 8 10 12 14 16 18
Did not change with market
Had Process, were not effective
More than 5 Strategic Objectives
No Process if missed targets
No Steady Progress
(blank)

20. What Words Describe
Hoshin Kanri?
0
5
10
15
20
25
30
Engagemen
t
Sample Size: 273 Surveys, 64
Alignment
Execution
Follow
Through
Strategy

21. Critical Success Factors
of Using Hoshin Kanri
Sample Size: 273 Surveys, 64
0
2
4
6
8
10
12
14
Accountability -
Implementating
Accountability -
Resourcing
Breakthrough
Objectives
Other Process Focus Results FocusedStrategic Metrics Understanding
of Variables
(blank)
Key Factors

22. Results as Lean Evolves
Depends on PhilosophyTotalBusinessResultsfromLeanTransformation
Starting out Maturing
Maturity in Integrating Lean and Business Strategy
I.Apply Tools
Through PDCA
II. Management Led Lean III. Aligned
Continuous Improvement
Without Philosophy
With Philosophy
Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015,
Figure 7-15. Results as Lean Evolves Depend on Philosophy

23. ``
Hoshin
Kanri
Daily Mgmt. (DM) with Kaizen
DM with no HK
Time
Performance(KPI)
HK with no DM
P
D
C
A
P
D
C
A
P
D
C
A
P
D
C
A
P
D
C
A
P
D
C
A
Relationship between Hoshin Kanri &
Daily Management
- Both are essential - Maintain good balance
Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015,
Figure 7-5. Hoshin Kanri and Daily Management work together for
breakthroughs and sustainment
- Both are essential - Maintain good balance

24. Expected Return from Process
Improvement Using Hoshin Kanri
Sample Size: 273 Surveys, 64
Immediate
1 Month
1 Quarter
6 Months
1 Year
2 Years
(blank)

25. Another Study: The Role of
Procurement Has Changed
Xchanging 2015; Global Procurement Study

26. Most Important KPIs:
Management Still Focuses on Cost
Xchanging 2015; Global Procurement Study
Cost
Factors

27. Procurement's
Perception of Meeting
Targets
Xchanging 2015; Global Procurement Study

28. Procurement Operations
Challenges
Xchanging 2015; Global Procurement Study

29. Top Procurement
Operation’s Challenges
Xchanging 2015; Global Procurement Study

30. Xchanging 2015; Global Procurement Study
Using Hoshin Kanri can Assist
Procurement Professionals
Why Procurement
Should Use Hoshin
Kanri?
S Help Meet KPIs
S Assist in Meeting Targets
S Address Time Pressures
S Increase Stakeholder
Engagement
S Address Talent Shortages
S Engage employees

31. Conclusion
• Over 70% of Organizations
conduct Annual Strategic
Plans
• 68% Not Satisfied with the
Process
• Hoshin Kanri Ties Strategy
Development with Daily
Management
• Hoshin Kanri Aids in
Engagement, Alignment,
Execution & Follow
Through
• Expect to See Return
Between 3 and 12 Months

32. What
Questions
Do You
Have?

33. Stabilize & Standardize Flow (11 Steps):
1. Define Future State Value Stream
2- 6. Implement Flow & Standard Work
7. Deploy Material Presentation details
8. Implement 5S & Workplace Organization
9. Improve and Standardize Change Over
10. Establish and Develop Team Leader
11. Implement Layered Process Audits
Year 2 -5: Dana Operating System
Implementation Roadmap
DOS
Training
Modules and
Standards
KPI’s,
Problem
Solving
Implement
Flow
Process
Improveme
nt (JIT &
Jidoka)
Develop
Best
Practices
Establish
System
Pull
Stabilize
Cell
Number
Completed
Qualified
SME's Quality WIP
Floor
Space Productivity
C/O
time
75 40 62% 64% 36% 76% 68%
Globally 2009 DOS efforts delivered important results
• Exceeded Conversion Cost target of $170M Reduction
(2010 Target to reduce 5% from 2009 Actual)
• Exceeded Reduction targets for Inventory cost & Days on Hand
2008
$915 M
63 Days
2009
$642 M
38 Days
2010 Plan
$542 M ($100M)
32 Days
INV$
DOH
Change
($273 M)
(25 Days)
2009 DOS Workshop Summary
(average KPI Improvement %)
Figure 7-13. Some Results of Implementing the Dana Operating

34. Figure 7-14. Proposal A3 for Planning Dana Operating System Activities and Expected
Results