Bunge Argentina's industrial complex processes nearly 8,000 tons of soybeans per day and operates around the clock to meet high demand. To address concerns about quality, productivity, safety, and efficiency while staying true to corporate goals, the complex implemented a LeanSigma transformation. Initial kaizen events achieved dramatic results like reducing restart time. Management commitment was key to success. While early enthusiasm drove changes, sustaining the transformation requires convincing reluctant supervisors to take a more active role in continuous improvement.

1. MANAGING TIMES
August.06
PUBLISHER’S
NOTE
CASE STUDY STRATEGIC
VISIONING
TECH TALK
2 8 10
Using LeanSigma®
To Make Molehills Out of Mountains
Bunge Argentina

2. ducation is one of the most critical steps in
empowering your people to engage in the kind of
continuous improvement and creativity that can
enable the enterprise to grow. Education comes in
many forms, and providing education to someone
doesn’t necessarily mean sending them to a university
or trade school. Manufacturing companies, like other
organizations, must encourage their best resources—
their people—to continue to learn and grow. And on
a continuing basis, all of us face the critical issue of
finding and keeping qualified and motivated
employees. One very effective antidote to this issue is
personal mentoring.
Mentoring provides a number of advantages. A
mentor, typically in upper management, can find
better access to the “employee state of mind” down
deep within the organization when involved in a
mentoring relationship. Mentoring can also help
managers identify leaders and doers—the very people
who may well become the next-generation leadership
in the organization. This is especially critical for
companies that need to consider succession planning
and don’t want the legacy of the lean transformation
to fall by the wayside with a change at the top.
Mentoring is also a form of team-building. Just
as with kaizen teams who understand that the group
is “in it together” to find a solution to a problem,
mentors and protégés develop a sense of togetherness
that can spread to other workers who benefit from
the relationship through shared knowledge.
Mentoring promotes trust and respect, which are the
first steps toward understanding and acceptance—
steps that lead to the ability to bridge divides and
facilitate problem solving using the intimacy of the
mentoring relationship to overcome obstacles.
Mentoring can also be a way for someone who
has been successful within a company to give some-
thing back—a bridge from the top to the bottom or
any level in between that can aid in growing the
company and ensuring the longevity of its successful
culture or proprietary road map for success.
If a company encourages mentoring and views it
as a long-term program, then success will likely fol-
low. Once employees see that an organization cares
about them and their needs, many will actively per-
petuate the cycle—and that can create the fabric for
a highly loyal, united, and competitive workforce.
Mentoring goes hand-in-hand with good lean
leadership. Lean leadership requires a commitment
from top management to not only have a plan for a
lean transformation, but also to drive that plan by
empowering employees to learn, think, and act
creatively. In this issue, we see how one process
agribusiness, Bunge, has found LeanSigma®
to be the
ideal means for melding corporate concerns (quality,
productivity, safety, and efficiency) with its corporate
ideals (maintaining a flexible and efficient organiza-
tion with a focus on integrity, the customer and the
farmer, teamwork, an entrepreneurial mindset, and
openness and trust) (p. 2). Being a lean leader is
addressed in a report from the 2006 Lean Leaders
Exchange (p. 6), and the theme of lean leadership is
carried further with an article on the importance of
policy deployment (p. 9), as well as an article on
management’s responsibility for recognizing when
abnormalities become “normal” and changing the
culture torecognize and remediate abnormalities (p. 10).
Underlying all of these issues is education,
because it is the foundation for creating successful
leaders—at all levels of an organization. Encourage
mentoring in your organization, and you will
encourage new leaders, all to your benefit.
Anand Sharma,
President & CEO, TBM Consulting Group, Inc.
asharma@tbmcg.com
E
PUBLISHER’SNOTE Education Is Empowerment

3. LEANCOMMUNITYNEWS
1
ndy Horbachchevsky, formerly KPO manager at Steinway in New
York, has been promoted to general manager. … Dan Klassen, formerly with
the Global LeanSigma Office at EDS, has joined Pella Corporation’s human
resources team. … Claudia Hall, regional manager for the Contract Division
at Sealy, was named KPO for the corporate business process initiative. …
Mark Phillips has joined the Kaizen Promotion Office at Vanguard Furniture.
He was formerly an upholsterer at Vanguard. TBM welcomes several new
consultants to TBM team. Dom Sawchuck and Harold Tessman will be
based in the U.S. Moisés Garcia, Francisco Javier Ayala, and Jose Luis
Garcia Hernandez will join TBM’s Mexico team. TBM also welcomes Beth
Ann Hunt and Michael Zsitnyar to its Durham office. Beth Ann and
Michael will be working in TBM Institute sales.
A
MANAGINGTIMES
A publication of
TBM Consulting Group
800.438.5535, www.tbmcg.com
Publisher
Anand Sharma
asharma@tbmcg.com
Executive Editor
William A. Schwartz
bschwartz@tbmcg.com
Managing Editor
Julie Poudrier
jpoudrier@tbmcg.com
Featured Columnists
Mike Caldwell Bill Schwartz
Charlyn Daugherty Sam Stevenson
Gary Hourselt Noel Temple
Marco Nascimento
Contributors
Stacy Aponte-Morris Bob O’Briant
Olga Bouche Gary Rascoe
Steve Hahn Bill Sample
Bob McElroy Ron Wince
Mike Noonan
Art Direction and Design
IONA design
info@ionadesign.com
Printing
Carter Printing & Graphics, Inc.
www.carterprintingnc.com
Published bi-monthly in Durham, NC
4400 Ben Franklin Boulevard
Durham, NC 27704
TBM Consulting Group, Inc. is the sole licensee of
LeanSigma®
, a registered service mark of Maytag
Corporation
If you would like to receive this journal via email,
send your vital information including email address
to tbm@tbmcg.com
On the cover: When there is a high demand for a
product, and a process runs around the clock nearly
every day of the year, concerns about quality,
productivity, safety, and efficiency loom large. Bunge
Argentina is using LeanSigma®
to address those
concerns while staying true to the corporate goals of
maintaining a flexible and efficient organization with
a focus on integrity, both the customer and farmer,
teamwork, an entrepreneurial mindset, and openness
and trust.

4. 2
P
CASESTUDY
icture mountains of soybeans dwarfing the
people and heavy equipment used to move them—
hills of beans like so many large, rounded grains of
sand waiting to be moved from ship to plant. It’s a
staggering sight to see so much of one grain in one
place, and this is what greets the visitor at the port
operations of Bunge Argentina’s Puerto General San
Martín Industrial Complex, located on the Paraná
river coast. Here the mountains of soybeans are
crushed into meal and crude vegetable oil and then
exported throughout the world. The port facility
handles other grains, such as corn and wheat, also
for export purposes, but soybeans account for the
bulk of the processing.
Bunge was founded in 1818 and has grown
into an agribusiness and food company with over
22,000 employees in more than 450 facilities in 32
countries around the world. In 1884, Ernest Bunge,
grandson of Bunge’s founder, moved to Argentina to
take advantage of the growing grain trade market.
Since that time Bunge focused on a number of
businesses, and today the company includes fertilizer,
agricultural, and food products with operations
around the world. Bunge has expanded its Argen-
tine operations via organic growth and acquisition.
By 2010, South America is expected to produce
127 million tons of soybeans—more than the rest of
the world combined. As South America’s leading
originator and processor of soybeans, Bunge’s
industrial facilities will handle much of the process-
ing of that grain.
Back in Puerto San Martín, the crushing plant
processes nearly 8,000 tons of soybeans every day.
Additionally, the two berths at the complex’s port
facilities have a 3,000 ton-per-hour loading capacity.
This is a high-volume processing plant that operates
around the clock.
When there is a high demand for a product and
a process runs around the clock nearly every day of
the year, concerns about quality, productivity, safety,
and efficiency loom as large as the mountains of
soybeans. Bunge Argentina’s corporate goals include
maintaining a flexible and efficient organization with
a focus on integrity, the customer and farmer,
teamwork, an entrepreneurial mindset, and openness
and trust. With these goals, taking the Puerto San
Martín industrial complex through a lean
transformation seemed the logical thing to do.
Carlos Nowik, plant manager of the complex,
joined Bunge in early 2005, and his first day on the
job coincided with the first day of the plant’s first
kaizen events. Fortunately for Nowik, he had been
exposed to lean principles in his previous job and so
wasn’t completely overwhelmed with the pace and
activity associated with the week-long kaizen while
trying to learn a new job.
Nowik says, “I was with Unilever in Argentina
as production manager and distribution manager in
a soap plant. For that reason I was very familiar with
continuous process improvements. Unilever had
been running a TPM program for some time under
the Japanese Institute of Plant Maintenance. So I
was pretty familiar with 5S, autonomous mainte-
nance, and things like that. Of course the industry
was absolutely different, but I was very happy to
start my new job doing things that I already knew.”
Those first kaizen events involved both the
crushing facility and the port operations. For the
crushing facility, event goals were to reduce the oil
in white flakes by 0.1 percent and initiate three
safety improvements and one housekeeping
improvement. For the port facility, the goals were to
increase the meal loading rate and initiate three
safety improvements.
These first two events, which were in addition
to several other events held at a number of Bunge
sites, were a phenomenal success. The crushing plant
met all its goals, and the port increased loading rates
by 10 percent and met the safety goals. From the six
events that were held at various sites over a
three-week period, Bunge realized $2.5 million in
potential savings and additional margin.
Bunge Argentina: Preparing for the Future with LeanSigma®
By Marco Antonio Nascimento, TBM Senior Management Consultant

5. 3
A subsequent kaizen event had a goal of
reducing time to restart a line after a shutdown.
According to Ariel Lascano, the production manager
who is responsible for the crushing lines, among
other things, restarting a line after a long-term
shutdown (such as for maintenance) or a power
outage was very time consuming. The kaizen event
sought to find ways to reduce the time needed to
restart a line. The results were extraordinary, but
more important according to Lascano was that the
improvements were made by the operators, “by us.”
Lascano adds, “These new methodologies have
removed our former daily way of working and allow
us to increase our work goals [by] searching for new
and better standards [of work].”
The dramatic results that can be attained using
kaizen have been well documented, but how does a
lean transformation really affect a company? Nowik
notes that LeanSigma is beneficial because it is more
focused and gets results more quickly and effectively.
Enrique Humanes, chief operation officer, adds to
that: “The vision you have working with a team is
much broader than when working alone.” And that’s
the essence of a lean transformation—teamwork and
creativity. “It’s really very creative,” continues
Humanes. “I’ve found that the people involved are
spectacular…because they want to be part of the
group and create value.”
Loscano adds, “All the people … know the
advantages and benefits of working with a lean pro-
duction system, and all of us try to eliminate those
things that don’t add any value to our daily efforts.”
The creativity engendered by a kaizen event is
evident. Consider that for those initial events at
Puerto San Martín participants had 107 improve-
ment ideas for the crushing operation and 78 for the
port. People’s willingness to make suggestions and
then act on them is a “good example of Bunge’s
values—commitment, entrepreneurship, and
innovation,” says Humanes.
However, enthusiasm alone does not guarantee
the success of a lean transformation. Nowik
highlights that commitment is the key, and that
commitment starts with management. “What I
learned at Unilever is that this kind of process goes
from top to bottom and it absolutely has to have the
great commitment of the top management to
support the process. Management has to provide the
resources and has to be convinced about the benefits
in both the short and long term. Very often this
kind of process will fail if the top management or
top directors are not convinced about it. When
people see the commitment, everything will go
better.” Lascano agrees, “The support provided by
the management has been crucial. This, added to the
positive results, has promoted even more the man-
agers’ involvement.” In fact, at a roll-out of lean at
another factory in Argentina all of management was
there for the kick off—a great show of commitment.
From the beginning of the process, both Nowik
and Humanes have spent a lot of time on the shop
floor. Nowik notes that Humanes is a driving force
for LeanSigma in the industrial parts of Bunge’s
business. “At the end of last year our corporate
president also came here to see how it was going on
the shop floor,” he adds. “We showed him our
achievements, especially in the production area and
in the boiler house. He was impressed by the
transformation he could already see.”

6. 4
CASESTUDY
Visitors to the factory can see the change in the
industrial area and the people involved. The
long-time employees at the plant, some of whom
have been working there for more than 20 years, are
now able to present a kaizen and talk in front of 30
people or more. Nowik says, “Those are simple
things, but they are very important because kaizen
events give them the opportunity to explain their
ideas and to show their own work to managers, as
well as how their ideas were implemented at the end
of the day.” Empowering employees in such a way—
allowing them to be creative and proactive—makes a
much more satisfied workforce.
When it comes to cultural transformation,
Nowik points out that it’s not how long a person has
been employed at a plant that will determine
acceptance, but rather how open-minded the person
is. “Fortunately we have many people convinced
about the value of kaizen,” says Nowik. Lascano
echoes that sentiment: “Currently, we all comment
on kaizen not only as a strong tool to solve problems
and to improve our work but also as a cultural
change, as a different way of carrying out our tasks.”
“We have more commitment right now in middle
management and in the operators themselves on the
shop floor,” continues Nowik. “They are moving
forward with kaizen, following the results, tracking
the action plans, and so on.” Lascano notes that this
has led to several positive changes: stronger
teamwork, respect for others’ ideas, better interaction
among the different areas of the complex, better
communication, and an every-day commitment to
doing things better.
Nowik points out that the process should
involve everybody—the kaizen promotion officer
(KPO) shouldn’t be single-handedly creating change,
but should only be facilitating it. Lascano adds that
the internal communication that the various areas
maintain with the KPO to plan the new events,
improve the visual contact and indicators, and apply
5S has been instrumental in the success of the plant’s
lean journey.
At Bunge, good early results and corporate
goals that promote entrepreneurship and innovation
went a long way toward convincing people of the
value of LeanSigma. But it’s not all been easy.
“Our main challenge for this year is to work
with the line supervisors,” says Nowik. “I have
challenged myself to give [the supervisors] more
tools and convince them to take a more active role.
They are very absorbed by the routine and doing
their job day-to-day and are not so convinced [about
the value of the changes brought about by a lean
transformation].
“They are key people because they are very
close to operators and usually they have great
experience in their day-to-day jobs, so it’s very
important to us to have them on our side. They are
the leaders, so they need to lead.”
According to Nowik, this is where Juan Lorido,
the plant’s KPO, has been quite effective. Lorido is a
former supervisor, so he knows the people on the
shop floor very well and they know him, which is an
advantage when he forms the teams for kaizen
events. He also knows the other supervisors well, and
this has helped him in working with them. His 20
years of service in the plant means he has the experi-
ence and knowledge that provides the credibility and
influence needed to be successful as a facilitator and
leader. As is critical for any KPO, Lorido has great
people skills and communicates well with colleagues,
shop floor workers, and managers. A successful KPO
can be instrumental to acceptance of the lean trans-
formation by the operators and supervisors on the
shop floor.

7. 5
Another key to acceptance is to make sure that
operators’ ideas are heard and acted on. Nowik says,
“In many cases kaizen projects arise from ideas
suggested by operators.” Knowing that their
suggestions will be given serious consideration and
then acted on has gotten many operators involved in
the lean process.
As Bunge looks ahead to the future, it is
building on its early successes and counting on its
people to drive continued improvement and
innovation. Nowik notes that when people visit the
factory—which is old and was acquired by Bunge
just four years ago—they comment that it looks
better and that they see something different going
on. These visitors then go out and spread the word
to other organizations, which in turn leads to more
requests for plant visits. “Outside recognition of the
improvements helps us to have the commitment to
go forward and get more results and more impor-
tantly to sustain the process, which is the main
challenge,” he says. Humanes adds, “[Bunge's lean
transformation is making] the heart of the organiza-
tion, our people, well prepared to face very hard
challenges in the near future.”
For the future, Humanes would like to see the
whole organization, from operations to trading,
adopt continuous improvement as a way of life,
eliminating waste in any activity Bunge may
undertake. Lascano would like to see suppliers
involved with kaizen events to lean the value chain,
an increasing emphasis on 5S and TPM, and the
inclusion of all of Bunge Argentina’s plants in the
LeanSigma transformation. With the evident strong
support and commitment from both management
and employees, it’s likely that Bunge will have no
problem surmounting any mountains in its path.

8. 6
The next critical step is to communicate this
vision throughout the company. A lean leader will
have the communication skills to engage senior
management, middle managers, and shop floor asso-
ciates. Good leaders will continuously communicate
the vision and objectives of the lean transformation.
They will also “walk the walk,” which means leading
by deeds, not just by words.
Corporate policy deployment can help with com-
municating the vision. Senior management develops
policy deployment, which will show its commitment
to the lean transformation. By codifying the goals for
a particular period of time, and the game plan for
reaching those goals, a policy deployment plan can
be the foundation upon which the lean transforma-
tion is built. At a lower level, the policy deployment
plan is the basis for creating a road map of strategic
projects to be undertaken.
One key component of engagement is training.
Giving people the knowledge and skills they need to
support a lean transformation is a basic means of
helping to ensure their involvement. Once you give
people the skills, then you can reasonably set expec-
tations for their involvement. Establish metrics and
expect people to not only track them, but also react
to them when abnormalities exist. Training the
management team to manage for daily improvement
is vital to a successful lean journey.
Another critical choice is how to staff the kaizen
promotion office (KPO). Be sure to pick the right
people for this important facilitation function and
provide them with the resources and tools they will
need. A strong KPO can make the difference
between success and failure of the lean transforma-
tion. The members of the KPO will need your
relentless, consistent support, and that means
helping to make sure that the scope and objectives of
each project are appropriate, assuming a sponsorship
role, supporting events and teams in addition to the
KPO, and celebrating and rewarding successes.
As a lean leader you will need to track results and
ensure that the resources are available for maintain-
ing the changes made and following up on and
completing 30-day lists. Use daily “walk throughs”
to show your commitment and to keep track of
metrics on SQDC boards.
BM’s Second Annual Lean Leaders Exchange
was held this summer outside of Winston-Salem,
North Carolina. The Lean Leaders Exchange was
developed as a leadership immersion opportunity to
give seasoned lean practitioners an opportunity to
take their lean initiative to the next level by provid-
ing leadership learning and development to support
the lean transformation, as well as networking
opportunities. One of the features of the meeting
was the single-theme-focused roundtable discussions
that took place on Friday. These discussions covered
several topics, one of which was lean leadership—a
crucial component of any successful lean
transformation. Here we share some of the insights
from the lean leadership roundtable participants.
Lean leadership requires that the lean initiative be
driven from the top and that the entire management
team is on board. Great lean leaders share certain
characteristics that contribute to their success and to
the success of the lean transformation. These
characteristics include knowledge, credibility, vision,
and passion.
But those characteristics alone do not ensure
success. Lean leaders must be supported by senior
management, including the CEO. Lean leadership
should also be supported by a policy deployment
effort at the corporate level—policy deployment is
the means by which the company will set the goals
and direction of the organization in their lean jour-
ney. Other critical issues that can positively affect the
lean transformation are the appropriate selection of
successful events, support from administration and
financial areas as well as the shop floor, and the
availability of resources.
Pitfalls exist too, and a lean leader cannot be
successful if all of senior and middle management are
not committed to the lean transformation. Other
pitfalls include lack of knowledge of lean among
senior managers, weak involvement by senior
management, the attitude that lean is limited only to
operations, too great a focus on savings rather than
on developing capacity for growth, a lack of owner-
ship of the lean transformation by middle manage-
ment, no sense of urgency, and a lack of resources.
So what does it take to be a successful lean
leader? First, a corporate vision must be developed.
This vision will create a sense of urgency and
address competition and how that relates to the
survival of the company. This vision should also
include a growth strategy—using lean to grow
market share and increase revenues—and even
consider how lean can be applied to make potential
acquisitions successful.
T
LEADERSHIP Lean Leadership: Paving the Way for Success
By Charlyn Daugherty, Executive Lean Advisor, and Bill Schwartz, ExecutiveVice President
Don't tell people how to
do things, tell them what
to do and let them surprise
you with their results.
~ George S. Patton

9. 7
Characteristics Shared by Lean Leaders
• Open minded/open to change
• Good listener
• Enthusiastic, passionate
• Good communicator
• Change agent
• Involved
• Risk-taker
• Understands the numbers
• Consistent, relentless
• Strategic thinker
• Sense of humor
• Assertive
• Motivated
• High energy
• Ethical
• Trustworthy
• Values people
• Comfortable dealing with people at all levels
• Patient
• Knowledgeable about theprocess
Accountability is another strong factor in a lean
leader’s success. You are responsible for not just
setting metrics but also performing audits or assess-
ments to review those metrics and solve problems.
Keeping a bunch of statistics is not helpful if those
statistics are never reviewed or acted on.
As the lean journey continues, you will need to
constantly revisit your vision, update your road
maps, and expand participation. Remember that
success does breed success, and success will
encourage more people to join in—but only if they
are made aware of those successes. Never stop
communicating. Don’t forget to provide incentives.
Reward success. Share your results, good and bad.
We all know that a lean journey is not without its
stumbling blocks. As a lean leader you must antici-
pate problems and actively work to remove barriers.
Be willing to make the difficult decisions, including
removing people who refuse to get on board. At the
same time promote and reward your “lean movers.”
Don’t fall into the trap of competing priorities.
This includes both constant shifting of priorities as
well as piling on too many projects to enable key
ones to be completed in a timely fashion. Stay the
course, using the policy deployment document and
your vision and road map as your guides. Rotate
people into KPO positions as a means of preventing
burnout and creating new leaders. Make sure that
the CEO and senior management renew their
commitment to lean and that the commitment is
communicated to all staff. Use your resources to
renew excitement and keep the “wow!” factor at the
highest level.
Being a lean leader also means planning for the
future. If you work to embed lean throughout the
corporate culture, the loss of one big lean advocate
won’t mean the demise of the lean process. Have a
succession plan. Push decision-making down to the
people at the first level. Empowering individuals is
one of the surest ways to make the lean culture per-
manent at your plant. Stress creativity before capital.
Establishing a “no blame” culture will encourage
people to actively participate, make creative sugges-
tions, and step up to the problem-solving plate.
Lean leadership is a tough but rewarding job. No
one is going to be perfect at all aspects of that job,
but if you remain open-minded, enthusiastic, and
committed, and you’re willing to keep learning, you
can be the kind of leader who can drive the success
of your company’s lean journey.
New leaders are waiting to surface in every organization.
Talent is struggling for air. Inventive impulses await
your command. I believe it is a leader’s responsibility to
release this energy, to sate this thirst, to create “human
communities” that promote trust and respect and challenge
people to achieve great things and honor their achieve-
ments. In return, such leaders enjoy a true wealth that
money cannot buy.
~Anand Sharma
The strongest principle of
growth lies in human choice.
~ George Eliot

10. while ago, Don Fites, former CEO of
Caterpillar, Inc., said that one of the most difficult
challenges facing manufacturing executives is
distributor relationships. Today, that may be an
understatement, even if for different reasons.
If your company manufactures a product that it
doesn’t sell directly to the people who use it, then
you have independent dealers, distributors, retailers,
catalog houses, manufacturing representatives, or a
combination of those doing the selling for you. You
probably consider these operations as your
customers—most likely your primary, most impor-
tant customers. They are the volume buyers. The
better they perform, the more you sell. They grow,
you grow. Or do you? You may or may not find your
top line growing, but in any case your bottom line is
getting squeezed and your prices are under
increasing pressure. We see it too often. Today, with
competitors everywhere on the planet, these primary
customers of yours are going price hunting. You are
at their mercy. They are keeping their margins at
your expense. They won’t stop as long as there is a
competitor of yours out there who has a substitute
product with a better price. You may think you’re
safe if you have exclusive arrangements with them.
Don’t be fooled. This price hunting will often be
disguised as increasing warranty claims, demands for
additional product features for too little or no
increase in price, or simply constant demands for
lower prices in order for them to compete.
If this is happening to your organization, how
can you stop it? You must turn this tide or be
destined to compete only on price, which will turn
your products into commodities and your
organization into simply the lowest cost producer—
one that is increasingly unable to invest in people,
new innovation, and new growth. In other words,
you will be simply a generic competitor with either
smaller margins or shrinking revenues, or both.
If this is happening to your organization, here are
seven steps you must take now to turn the tide.
Step one: Start thinking of your dealers, distributors,
retailers, catalogue houses, or manufacturing
representatives as distribution channel partners rather
than customers. They must partner with you to
bring the highest value to your real customers: those
who use your products. You and your distribution
channel partners can both win, but not at each
other’s expense and certainly not without adding
true and high value for the real customers.
Step two: Take an inventory of what these distribu-
tion channel partners actually do. Don’t be satisfied
with general descriptions like “build relationships
with customers” or “reach customers you cannot.”
List specifically what they do—the actions they take
and the processes they use to build these relation-
ships, reach these customers, and so on.
8
Gary Hourselt
A
STRATEGICVISION
Step three: Go listen to the “voice of the real
customer.” Organize cross-functional teams of people
in your own organization to work diligently and
consistently to find out which product features and
services (key point) those who use your products
value and which they do not. Go visit them. Ask
them general, open questions about what makes
them more or less successful; what makes them more
or less profitable; what makes them more or less
happy; what keeps them awake at night. Observe
them. Above all, listen to them. Call them on the
telephone. Read their web sites. Make a list of the
most significant factors of competition you uncover
and identify which are highly valued and which have
low value for your real customers. Create real
intimacy with those who use your products.
Step four: Go back to the specific inventory of what
your distribution channel partners actually do today.
Armed with your voice of the real customer data,
decide which of the actions and processes that the
distribution channel partners do are of high value to
the real customer and which are not. If there are any
activities and processes being performed that are of
high value for the real customer, decide then how
much the customer should be willing to pay for each
of those value-added actions and processes. Here’s
the real test: Would the customer be willing to pay
for them at all?
Step five: Using the same inventory of what your
distribution channel partners actually do today,
decide what they do that is of real value to your
organization and how much you are really willing to
pay for it.
Step six: Reduce or eliminate the activities and
processes that your distribution channel partners
actually do today that are of little or no value to your
real customers or to your organization. At the same
time, find ways to elevate the things, if any, that your
distribution channel partners actually do today that
are of high value to your real customers.
Step seven: Together with your most interested
distribution channel partner, create product and serv-
ice bundles that are of high value to your real customers
based on what you have learned from them.
Coordinate roles based on the strengths of your organi-
zation and the strengths of your most interested distri-
bution channel partner. Above all, do expect your
customers to pay for high-value product and service
solutions, and do not pay your distribution channel
partners for anything that does not provide value
and certainly do not ask your customers to do so.
If you become intimate with your real customers
and their businesses and align your own organization
and your distribution channel partners with what
your real customers value highly, you will turn
the tide.
Strategic Distribution Channels: A Partnership to Deliver Value
By Gary Hourselt, Vice President, TBM International and Strategy Practice

11. 9
s there a connection between successful
organizations and their method of communicating
the strategic direction of the business?
In our interactions with workers and the
managers who guide them, the goal is always to help
provide them with whatever it takes to maximize
their effectiveness and productivity. Sometimes this
means that we become a communications link
between the goals of the organization and the activity
on the shop floor.
It is sometimes amazing to me the disconnects
that exist at all levels of an organization. How can a
business ever dream of being successful, when the
direction it wishes to go is unclear to all?
Employees are the not-so-hidden, but so-often-
overlooked, best resource a company has. You can
build the finest facility and equip it with the most
up-to-date technologies, but if you put in place a
workforce that is untrained, disjointed, and
disillusioned, you have nothing. It is imperative that
wherever we go, there must be an assertive, very
visible process in place to include employees in a
concerted work process and product flow.
This concerted effort of inclusion starts with
policy deployment from top management. Policy
deployment means identifying and qualifying special
goals for the organization for the coming year. Each
level and each unit of the organization shares in the
realization of the means to achieve these overall
objectives in a timely, doable way. Once the
company’s policy deployment goals have been com-
municated throughout the entire organization, each
unit within the organization develops its own plan
of how that unit will operate to help achieve the
goals. You can’t expect the workers on the shop floor
to help meet company goals if they aren’t aware of
those goals and the role they play in helping to
attain them. If you tell them what the goals are, then
they can use their creativity and ingenuity—already
in bloom thanks to the organization’s lean efforts—
to work together for the company’s profitability
and growth.
Culture Change: The Role of Policy Deployment
By Mike Caldwell, Senior Management Consultant
FUTURES
I
There is great wisdom in the belief that “People
support what they help to create.” In a carefully and
purposefully crafted environment, this is not only
possible, but very doable and very attainable. It also
takes a great deal of trust.
Associates deserve to understand the expectations
and outputs of their part in the process. Once they
grasp some key fundamentals such as lean
manufacturing, how to participate in kaizen events,
the intrinsic nature of quality in all aspects of their
work, and how to optimize visual management tools,
much can be accomplished. When they are able to
connect how these ultimately affect the company’s
goals for the year, they will understand their personal
role in helping to meet those goals.
In this way a company can use policy
deployment to help drive cultural change. Policy
deployment starts at the top. Just as with a lean
transformation, support and direction from the top
help to drive the process and better ensure success.
Communicating those goals to everyone in the
organization and then helping everyone to
understand how they can help push the culture
change. This is employee empowerment, and the
rewards are many, from the sense of satisfaction and
participation the employees feel to profitability for
the company.
The bottom line is that policy deployment will
help establish and maintain organizational culture
change.
Mike Caldwell

12. operator find another defective part and end up
taking precious time out of her day to sort through
and find good parts. I look at the hour-by-hour
chart and see that targets have never been met. (The
hour-by-hour chart must be updated hourly,
detailing the abnormalities along with time lost.
Standard work must be in place to define the
initialized normal point.) Almost every hour was
short of the target by at least ten components.
I ask the management team how they meet their
customer demand and am told they work a lot of
overtime and add people to the process when they
can. My concern now is not so much with the
operator, but with the management team’s complete
lack of a sense of urgency.
This waste of time and lack of a sense of urgency
results from an abnormal activity being allowed to
become a normal standard practice or an accepted
way of doing business. That the supplier was alerted
to the problem is a good thing, but what happened
to the follow-up, and why has no one taken any
corrective steps to make this a priority?
The operator wasn’t at fault—she was doing the
best she could to produce only good product, but
the potential for excessive waste is huge, especially if
defective product gets mixed with the good product.
Not only is time being wasted, but what happens if
one or, worse, more than one defective product is
received by the customer?
Management must be able to recognize an abnor-
mality for what it is and respond in a timely manner.
The supervisor, once notified of the problem, should
immediately assign someone to sort through the
parts to ensure the operator receives only good parts
to perform her job. Making the operator sort
through her own material adds non-value-added
time to her process. Operators are paid to make
product; if they’re not making product the company
is not making money. Having one person, such as
the water spider or team leader, sort parts would be
more cost-effective than requiring overtime or
adding people to the operation. Adding people
simply results in more people performing the same
non-value-added activity. Having the right parts at
the right time for the operator is also more cost-
effective than having the operator look for good
parts or rework defective material.
Once someone is sorting through the material,
the impact of the defective parts on the business can
be measured and documented. This gives you some
power over the supplier to prove the numbers, as
well as creating expectations as to how and what the
supplier should be doing to correct the problem.
This will also give the management team some sense
of how big the problem is, as well as the real impact
on the business.
bnormality management is a topic we need
to be more in tune with if we are to become better
managers. Webster’s New World Dictionary defines
“abnormality” as an abnormal thing or event or the
quality or condition of being abnormal. Abnormal is
defined as not average, not typical, and not usual. An
abnormality is also any deviation from standard
operations.
A good part of our days as managers is spent
battling such things as not having material, having
the wrong material, or having defective material, not
to mention not having enough people to do the job
or having to wait for decisions to be made by people
in the quality or engineering departments. This is
only a small part of the firefighting we do—and yet
firefighting, dealing with the “normality” of abnor-
mality, takes away time that could be used to train
operators, perform continuous improvement activi-
ties, and meet daily customer demand. Firefighting
seems to have become a normal part of our lives, an
accepted practice, when in fact it should be consid-
ered an abnormality. Anything that prevents an oper-
ator from doing his or her job the way it was meant
to be performed is an abnormality, including
machine breakdowns and process breakdowns. An
outsider can easily see the abnormal, but for those of
us who deal with the day-to-day supervision of run-
ning the business, the abnormal becomes the normal.
We have visited numerous firms that seem to
view firefighting as a part of life in the world of
manufacturing. How many times have you watched
an operator struggle with defective parts from a
supplier, either internal or external? How many times
have you watched operators leave their work stations
to get the right parts from the store room? How
many times have you had to scrap a batch of parts?
How many times do schedules change mid-cycle?
Think about these things as you read through the
following example, but don’t feel like you’re alone—
we see this in most of the firms we visit.
While touring a widget facility with the supervi-
sors and management team, I notice an operator
struggling to assemble her widgets. After several
minutes she realizes one of the components is
defective, sets the part aside, and retrieves another
part to complete the operation. What surprises me is
that not one of the managers or supervisors takes any
action to assist the operator. One of the supervisors
states that this happens all the time and they have
informed their supplier of the problem. When asked
how long this has been a problem, no one had a
good answer. Most surprising of all was that no one
on the management team really understood how big
an impact this abnormality is having on the business.
I become even more concerned as we watch the
A
10
TECHTALK Abnormality Management and Response
By Sam Stevenson and Noel Temple, Senior Management Consultants

13. 11
StepstoAbnormality Management
• To establish the urgency of timely response to
abnormality, the person in the corner office must
be involved in the process from the beginning,
emphasizing the need to manage abnormal
conditions as they arise.
• The area manager must have the authority to
summon anyone (horizontal support) needed to
insurethe abnormality is addressed to the estab-
lished countermeasure (temporary/permanent).
• The area manger and cell leader must check the
hour-by-hour chart hourly for target achievement
and comments on any abnormal conditions that
may exist. (This action should be supported
horizontally by mid-/senior-level management.)
• When a violation occurs, the cell leader responsible
must make the call (confront the violation)—and
must do so in a constructive manner so as to not
alienate associates, but to constructively work with
them to resolve the violation.
• A quick response to the abnormalities within the
area must be standard operating procedure. A good
method of signaling the area leader and manager
of the abnormalities from all work stations must
be in place and operative.
• Senior staff must frequently visit the shop floor to
insurethe lean principles are being sustained. They
should ask questions regarding the hourly
performance and offer assistance.
• Supportgroups (maintenance, purchasing,
manufacturing engineering, materials, and so on)
must understand that smooth running of
production lines is paramount and that they are a
large part of the support needed for success.
• Consistency of confrontation is imperative to
managing abnormalities, and all levels of
management must be involved.
This is just one aspect of the abnormality
management process. We still need to make our
factories visual and organized. We need to improve
maintenance activities through total productive
maintenance to create an autonomous work
environment. We need to become real problem
solvers and real managers of abnormality.
To do a better job at responding to abnormality,
we need to have a response system in place that
allows operators to signal when there is an
abnormality, which requires an immediate response.
A number of systems exist to allow operators to alert
responders to an abnormality.
My favorite system is the andon board, which is
similar to a bingo board. Each station on a
production line has a number that corresponds to a
square on the board. Within each square are three
light bulbs: green, yellow, and red. Green means all is
well, yellow means an abnormality exists and the line
will be down in the next cycle of takt time, and red
means the line is down because of an abnormality.
Using an andon or other notification system
requires responders with specific roles and
responsibilities. First responders, such as the water
spider, team leader, or supervisor, should take some
immediate action to deal with the abnormality. From
there a decision should be made as to whether
another level of response is required, such as from
engineering, maintenance, quality, or material.
Once the problem and its point of cause have
been identified and temporary corrective actions
have been implemented, the root cause of the
problem must be identified. Once the root cause is
determined, countermeasures to prevent the problem
from reoccurring need to be instated, with follow-
up to ensure the right things were done for the
right reasons.
Most of what has been mentioned here is only a
small sample of abnormality dealt with by
supervisors on a daily basis. So, how do we become
real managers of abnormality? First we need to
change how we see our business and understand that
what appears to be normal may in fact be abnormal.
Second we need to know the seven major wastes of
manufacturing: defects, overproduction, inventory,
motion, processing, transportation, and waiting.
Each of these is an abnormality. Then we must put
in place the appropriate actions to resolve abnormali-
ties as they happen.(See the sidebar for a list of
activities needed to become successful abnormality
managers.)
As we transform our companies we must exercise
good judgment in a consistent manner to drive the
cultural behavior in a positive direction and
determine our future business longevity. Part of that
good judgment means recognizing and remedying
abnormalities. By having measures in place to deal
with abnormalities as they happen—empowering
associates to act instantly, even to the point of
stopping a line, you place value on their judgment,
which in turn engenders a sense of responsibility that
ultimately will help insure that your processes are the
best they can be. That, of course, means greater
profit for the company, as well as a better position
from which to deal with global competition.

14. FIELDNOTES
12
Standard Work Observations
ustaining the results from each kaizen event
is a challenge for every organization. One of the
tools to help an organization sustain improvements
is the standard work observation. Basically, supervi-
sors set aside 15 minutes per day to observe one of
their team members performing to standard work.
The supervisor then documents the observations on
a “Standard Work Observation Form.” The goal is to
observe every team member in rotation over a short
time period. Many waste issues and improvements
can be identified, as well as potential problems with
the previous event. Solutions can then be brain-
stormed and implemented, thereby increasing the
chance for the results from a previous event to be
sustained. Several hints:
• Schedule the observation for the same time each
day. Doing the observations right after a break or
after lunch works well because it serves two
purposes—the observation gets done, and the
operators get used to the supervisor being at a
random work station when the employees are
supposed to be there.
• Always time the tasks during the observation,
even if the complete standard work sequence will
not be completed during the 15-minute
observation period.
• Make the appropriate changes that were
identified during the observation. Doing the
observation with no action is a missed
opportunity.
Many supervisors think they cannot find 15 min-
utes each day for the observation, but can a leader
really afford not to spend at least 15 minutes per day
to identify issues and solutions in their work area?
— Bob O’Briant
S
Kaizen and Production Preparation Pay
hen the company that had traditionally pro-
duced the carpets for all of the vehicles in Nissan’s
X61B program, which includes the Pathfinder,
Xterra, and Frontier truck, ran into financial difficul-
ties, Nissan awarded part of that business—the
manufacture of carpet for the Xterra and Frontier—
to Lear. The original company used a “foam in
place” method to produce the carpet for the Nissan
vehicles. This method involves injecting liquid foam
between a heated piece of carpet and a three-
dimensional mold in the shape of the vehicle floor.
We planned to use a different method of forming the
carpets and needed to get the manufacture up and
running quickly, efficiently, and for minimal cost.
Lear is an important customer for us, and this
Nissan contract accounts for nearly $2 million of our
sales, so we wanted to make sure the transition went
smoothly. Normally the process of adding the
capacity to produce vehicle carpets—from tooling
to launch—would take from 18 to 24 months. In
this case, Lear worked jointly with us to develop an
alternative to the foam in place process, an acousti-
cal/thermal insulator manufacture of recycled
textile fibers.
Working with Lear, and using the LeanSigma®
methodology of production preparation (2P), we
were able to launch this program in about six
months. The objective of the 2P event was to achieve
the best arrangement within a work area for the
Nissan X61B molded floor with the minimum
people, machines, methods, and materials; improve
productivity and quality; and eliminate waste.
W

15. 13
Prior to the 2P event, we had already used
kaizen events to create extra capacity in certain man-
ufacturing cells. Kaizen also allowed us to consoli-
date into a single cell programs that were originally
produced in program-specific cells. We also
performed a set-up reduction kaizen to cut the time
needed to change out tools. Post-kaizen, set ups that
had taken two hours took just 30 minutes to com-
plete, again enabling us to create extra capacity.
During the 2P event, we discussed and evaluat-
ed automation alternatives, as well as labor costs for
several different production scenarios. We also con-
sidered a number of different ideas for heating and
cooling the molds.
We determined that we could use existing
equipment that had been freed up by kaizen events
at another plant, thereby avoiding any capital expen-
ditures. We conducted point kaizens on two other
cells in the plant to free up two operators for work in
the new Nissan cell. Currently, we are producing 60
parts per hour using two operators in the new cell.
By using kaizen and 2P, we were able to meet Lear’s
needs in record time and at no additional cost to us.
— Roy Heeralall, CI Manager,
Janesville-Sackner Group

16. Quest for the Perfect EngineTM
Sept. 27-28 Stuttgart,Germany
Oct. 2-3 UK
Oct. 17-18 Brazil
Nov. 1-2 Miami
Dec. 5-8 Shanghai
Dec. 12-14 Tucson
Lean Management Accounting
Nov. 28-29 Durham
LeanSigma®
Fundamentals
Oct. 24-25 Mexico
Design for LeanSigma New Products and Processes
Dec. 11-15 Durham
Kaizen Breakthrough Experience
Oct. 16-20 Yale La Fonte – Sao Paulo,Brazil
Nov. 6-10 MidContinent Engineering-Minneapolis, MN
Nov. 6-10 WIKA Alexander Wiegand GmbH & Co. KG
Klingenberg, Germany
Shop Floor Kaizen Breakthrough Instructor Training
Nov. 6-10 Durham
Nov. 6-10 Derby, UK
Nov. 12-15 Durham
Kaizen Promotion Office Workshop
Oct. 2-4 Brazil
Oct. 31-Nov.3 Durham
Transformation Management for Continous Improvement
Dec. 4-5 Durham
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TBM LeanSigma®
Institute
2006 Event Schedule