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© 2015 The Karen Martin Group, Inc. 1
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
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
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
www.ksmartin.com/webinars
5
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
Wherever there is a request and a deliverable,
there is a value stream.
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
1996
Value
Value
stream
Flow
Pull
Perfection
Value Stream’s Roots
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.”
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
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
Function FunctionFunctionFunction
Core Value Stream
Support Value Stream
Support Value Stream
Silo-Centric vs. Value Stream Thinking
Value
stream
segment
Value
stream
segment
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
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
Value Stream Mapping Benefit:
Seeing the Whole
16
Value Stream Mapping enables a
mapping team to get ABOVE the work
17
18
Strategy
Before
Tactics
Options:
• I-55/57 & I- 30
• I-70 & I-44
• I-69 & I-30
20
VSM Promotes System Thinking
21
System Efficiency = Optimal Value Stream Performance
Departmental Efficiency ≠ System Optimization
22
© 2016 The
Visualize Information Management Problems
23
24
Visualize the entire cycle of value delivery on a single sheet of paper
24
Value Stream Mapping
Facilitates Leadership
Consensus & Accelerates
Improvement
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
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
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
1
Information
Flow
2
Work Flow
3
Timeline
Basic Current State Value Stream Map
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
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
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
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
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
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
What problem are you trying to solve?
36
Desired State
(or known standard)
Current State
Gap =
Problem
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
Go to the
Gemba to
learn how
work REALLY
gets done
Go & See
Ask Why
Show Respect
Daily Leadership Briefings
Day 1 – Share insights; reduce resistance
Day 2 – Build consensus re: future state
Day 3 – Gain commitment for action plan 39
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
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
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
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
Value Stream Ownership
44
45
And Repeat…
46
It’s not about the map.
It’s about the conversations,
the insights, the decisions,
the organizational healing
that mapping enables.
© 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
Questions or
comments?
48
ksm@ksmartin.com
49
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
  • 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
  • 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
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  • 19. Strategy Before Tactics Options: • I-55/57 & I- 30 • I-70 & I-44 • I-69 & I-30
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  • 21. VSM Promotes System Thinking 21 System Efficiency = Optimal Value Stream Performance Departmental Efficiency ≠ System Optimization
  • 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)
  • 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
  • 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