Building a Lean Enterprise: Navigating
the Common Obstacles to Success May 13, 2010 Company LOGO

Your Instructor  Provides Lean
transformation support to non-manufacturing settings.  Co-author, The Kaizen Event Planner: Achieving Rapid Improvement in Office, Service, and Technical Settings Co-Developer, Metrics-Based Process Mapping: An Excel Solution Lean Enterprise Program Instructor University of California, San Diego Karen Martin, Principle, Karen Martin & Associates 2

You will learn…  How
to establish a five-year improvement plan.  Essential organization-wide learning needs.  How to accelerate results via organization-wide 5S/ Visual Management, Standard Work, & Error-Proofing activities.  The benefits of establishing a Lean Steering Committee.  How to develop a kaizen culture that generates “single hits,” while also achieving home runs and grand slams.  How to establish an infrastructure that builds organizational competencies, while generating measurable results.  The importance of building a foundation for success even if you’ve been on the Lean journey for years. © 2010 Karen Martin & Associates 3

Do not underestimate the degree
of learning, patience and resources needed to experience success! © 2010 Karen Martin & Associates 4

Obstacles to Success Problem: Weak
or No Leadership Buy-in; Attempting a Grass-Roots Effort © 2010 Karen Martin & Associates 5

The Executive Champion(s) © 2010
Karen Martin & Associates 6

Obstacles to Success Problem: No
Sense of Urgency © 2010 Karen Martin & Associates 7

The Journey Begins Create and
communicate a sense of urgency / burning platform    “Why should we care?” The delicate balance between motivating and inducing fear Data sells! © 2010 Karen Martin & Associates 8

Establish a Sense of Urgency
 Shrinking margins  Customer dissatisfaction  Shrinking market share  Rising costs  Increased domestic and/or global competition  Desire to absorb growth without adding commensurate staffing  Impending acquisition  Safety and quality slips  Reduced innovation © 2010 Karen Martin & Associates  Staff burnout  Rising turnover  Regulatory pressure / compliance issues  Rising litigation  Social, economic, environmental, or political pressures  Downward performance trends (in speed and/or quality)  The unknown 9

Obstacles to Success Problem: Non-Existent
or Unrealistic Strategy © 2010 Karen Martin & Associates 10

Develop a Strategic Improvement Plan
In many organizations, there is fairly significant disconnect between what they aim to achieve with Lean and the way they go about achieving it. © 2010 Karen Martin & Associates 11

Five-Year Plan 1. Where are
we now (in terms of performance)? 2. Where do we want to be? 3. What’s it going to take to get there?       Expertise / guidance Learning / workforce development Time Resources Strong communication Leadership © 2010 Karen Martin & Associates 12

Establishing a Strategic Improvement Plan
Tied to business goals / strategic plan How much? How fast? Priorities?   Evolution vs. revolution Establish clear goals and objectives.  What do you hope to achieve with Lean?  Within what time period?  What does that future state look like?  How does it feel?  What is it like to operate in that future state?  How will we measure our success? © 2010 Karen Martin & Associates 13

Achieving Optimal Performance Quality Morale
Cost Optimal Performance Safety © 2010 Karen Martin & Associates Delivery 14

Lean as a process design
technique Hoist Rig Up Spaghetti Diagram Before Kaizen Blitz Improvements Estimated distance walked during Rig Up = 3095 ft Diagram follows the Floor Hand and does not include moving the A-Frame Rig Up Time = 90 minutes Florida Hospital DeLand Discharge Process - 2A Pilot VAlue Stream Champion: Nancy Clark Future State Value Stream Map 1/26/2010 Customer Demand (2A Only): 8 discharges/day; 55/week; 2,860/year (Takt Time = 26.2 minutes) Patient Relieve nursing from transporting nurse-collected specimens to lab Perform / Improve Med Rec at admission Process Blocks Additional Cerner Training Canopy Green border = Value-Adding Yellow border = Necessary Non-Value-Adding Red border = Unecessary Non-Value Adding Cerner Kaizen Improvement Bursts Implement Discharge Huddles Clear Patient Relieve Nursing of Patient Transportation Case Management %C&A = 99% Create Standard W ork for Entire Process Clear Patient; Create Transfer Packet (if needed) Implement Visual Tracking Enter Order Streamline Attending/Consult Communication Primary Nurse Primary Nurse PT: 1 mins. %C&A = 99% Note: Ongoing 1 mins. Hold Discharge Huddle Enter DC Info (Depart I) Case Mgr & Charge Nurse Primary Nurse PT: 15 mins. %C&A = 90% 15 mins. PT: 10 mins. %C&A = 90% 10 mins. Before: 3,095 feet walked Transport Patient Error-Proof Disposition Codes HUC PT: 1 mins. %C&A = 99% Write Order; Complete Paper Med Rec Phy sician PT: 30 mins. %C&A = 80% 30 mins. © 2010 Karen Martin & Associates Perform Med Rec; Print DC Packet Primary Nurse PT: 20 mins. LT: 40 mins. %C&A = 50% 40 mins. 20 mins. Messengers 0900-0430 Nursing 0430-0800 PT: 5 mins. %C&A = 99% Error-Proof Med Rec %C&A = 99% Add Pt. to Discharge Board; Update as Needed AFrame Purple = RIE-1 Blue = RIE-2 Orange = Project (Owen) Green = Leadership (Opal & Daryl) Prepare Patient Primary Nurse PT: 15 mins. LT: 30 mins. %C&A = 80% Remove Equip & Items w/ Meds/Body Fluids; Call EVS; Discharge Patient Discharge Patient Primary Nurse PT: 1 mins. LT: 1 hrs. %C&A = 99% P/U HUC 2.0 hrs. 5 mins. Water EVS PT: 5 mins. LT: 2 hrs. %C&A = 90% 30 mins. 15 mins. Clean Room; Change Bed Status to Available 60 mins. 1 mins. PT: 30 mins. LT: 60 mins. %C&A = 95% 60 mins. 30 mins. Lead Time (LT) = 6.1 hrs. Process Time (PT) = 127 mins. % Activity = 34.7% Rolled First Pass Yield = 21.7% Power Pole 15

Lean as a business management
approach © 2010 Karen Martin & Associates 16

Building a C.I. Culture Years
5 & Beyond Company-wide engagement – everywhere, all the time Support needed only for audits, bandwidth gaps, continued learning “Life is Good” Stage • Daily kaizen is the norm • “Action now” dominates • Most processes are stabilized with minimal waste and output variation “Settling In” Stage Years 3 & 4 More staff engagement – reduced need for formal Kaizen Events Years 1 & 2 Small percentage of staff engaged – project-based Light support from seasoned improvement professionals Heavy support from seasoned improvement professionals • Demonstrating learned competencies • Process owners manage performance • Becoming more proactive “Disruption” Stage • Sensei-dominated • Much mentoring & learning • Heavy use of Kaizen Events • Many issues to be resolved 17

Obstacles to Success Problem: Lack
of Alignment Around the Improvement Strategy © 2010 Karen Martin & Associates 18

Create a Lean Steering Committee?
Role           Gather improvement ideas from across the enterprise. Evaluate & prioritize improvement opportunities (closely tied to annual business goals). Enable alignment across leadership team. Communicate upcoming improvements and outcomes. Aid in necessary culture shift. Assure ongoing process measurement and continuous improvement is occurring. Determine ongoing workforce development needs. Stay informed about competing priorities and shift improvement focus accordingly. Allocate resources. Assess progress and adjust as needed. © 2010 Karen Martin & Associates 19 © 2010 Karen Martin &

Lean Steering Committee Composition -
10 people max   Cross-functional Mixed perspectives (sr. leadership, middle management, improvement resources) Meeting Frequency – scaled back over time    Monthly for first year or two Possibly quarterly for years 2-5 Disband in year 5, if organizational DNA is “set” © 2010 Karen Martin & Associates 20

Obstacles to Success Problem: Lack
of understanding; Missing skills © 2010 Karen Martin & Associates 21

Largest Obstacle to Success: Lack
of Understanding & Skills Lack of training Ineffective training   Poor timing - Large gap between classroom content and real-world application Inappropriate content – too much, too little, etc.  Establish clear learning objectives – what should participants be able to do after the training?   Does Sr. Leadership really need to go through green belt training? Improvement professionals need to be proficient in ALL Lean tools and leading change  No application – learn-do is vital!  All principles and tools and no “sales” (here’s what Lean can do for us) © 2010 Karen Martin & Associates 22

“Hooking” People into Improvement “You
had me at hello.” © 2010 Karen Martin & Associates 23

Spectrum of Learning Continued Learning
Proficiency Skill Development Deeper Understanding Behavioral Intellectual Awareness © 2010 Karen Martin & Associates 24

Largest Obstacle to Success: Lack
of Understanding & Skill Development  Leadership    Initial ½-day to full-day overview Reflection and continued learning every six months Required reading – The Toyota Way and others  Middle management  Eventually at least a 2-day overview about key principles and process management  Frontlines   Eventually at least a 2-hour overview about key principles Heavy emphasis re: “what’s in it for me?”  Improvement resources  Significant development © 2010 Karen Martin & Associates 25

Improvement Professionals’ Learning Needs –
The Basics  Business  Finance, sales & marketing, operations, etc.  Your industry     Your customers Your competitors Regulatory and political environment Market trends  Your company / organization      SWOT (strengths, weaknesses, opportunities, threats) Revenue streams Cost structure Business goals Leadership concerns (and other key stakeholders) © 2010 Karen Martin & Associates 26

Improvement Professionals’ Learning Needs (continued)
General     Process management Project management Communication Countering resistance Lean Philosophy    Value, Value Stream, Flow, Pull, Seeking Perfection PDCA Workforce engagement © 2010 Karen Martin & Associates Analytical and Execution Tools        Key Lean Metrics A3 Management Root Cause Analysis Value Stream Mapping Metrics-Based Process Mapping Spaghetti diagrams Kaizen Events 27

Improvement Professionals’ Learning Needs –
Tactical Tools Process Stabilization Tools

Improvement Professionals’ Learning Needs –
Tactical Tools FlowEnabling Tools

Professional Development for Improvement Resources
University-based  University of Michigan; Ohio State;University of Kentucky; University of Tennessee; San Diego State University; University of California, San Diego In-house certificate programs or singlesubject workshops Workshops & conferences – LEI, AME, Shingo, ASQ, IIE, etc. Read, read, read… © 2010 Karen Martin & Associates 30

Organization-wide Learning Lean foundation tools
     Tools: Work standardization, error-proofing, 5S & visual management (using the PDCA method) Audience: middle managers to senior leaders Initial training: half to full-day session Assignment: Improve one area or one process; one month to complete Reporting & reflection A3 problem-solving development   20 max; 4-8 problem teams (owners) Skilled coach © 2010 Karen Martin & Associates 31

Obstacles to Success Problem: Inadequate
improvement resources © 2010 Karen Martin & Associates 32

Improvement Resources Internal  
Dedicated vs. shared responsibility Quantity External   Training & development Leading improvement activities  Observational learning + results generation  Coaching © 2010 Karen Martin & Associates 33

How many dedicated resources? Ultimately
3-5%, per GK. Examples   2,400 employee org has 4 dedicated resources and 15 part-time trained facilitators. 1,200 employee organization has 6 dedicated resources. © 2010 Karen Martin & Associates 34

Obstacles to Success Problem: Slow
results © 2010 Karen Martin & Associates 35

Year One Experience quick successes
  Requires skilled professionals – if not internal, then bring in external support Don’t attempt to solve your toughest problems first – build “improvement muscles” Gain leadership support  Via education, experience, and results Familiarize the workforce to Lean principles and benefits Begin identifying and/or developing dedicated improvement staff. © 2010 Karen Martin & Associates 36

Year One – Quick Successes
Select 1-3 value streams, based on business need  Select executive sponsors and/or value stream champions Conduct proper value stream mapping activities, including the development of an actionable implementation plan  Execute the implementation plan   Heavy use of Kaizen Events to begin shifting culture, develop the workforce, and gain quick results © 2010 Karen Martin & Associates 37

Obstacles to Success Problem: Results
not communicated © 2010 Karen Martin & Associates 38

Communication Options Intranet Closed circuit
LCDs Posted / Visual    Improvement boards Break rooms Hallways Paycheck stuffers Company newsletter Meetings  Standing agenda item? © 2010 Karen Martin & Associates 39

Obstacles to Success Problem: Processes
not monitored and continuously improved © 2010 Karen Martin & Associates 40

Process Management  Process Owner
 Monitors KPIs (key performance indicators)  2-5 max  Types        Operational (Time & quality) Financial Customer / external stakeholders Employees / internal stakeholders Reports performance Leads continuous improvement as necessary Manager or lower is best © 2010 Karen Martin & Associates 41

Obstacles to Success Problem: Everything
waits for a Kaizen Event © 2010 Karen Martin & Associates 42

Blue = Improvements that do
not require help from others. Yellow = Improvements that require help from others.

Shingo-Prize Winning Company’s Suggestion Program
For ideas that require help from other departments: 1. The employee completes a yellow suggestion card and places it on the Improvement Opportunity Board under the “new opportunity” column for their department. Company-wide improvements are placed in the Company-Wide row. The department’s designated “improvement lead” reviews the suggestions and talks with stakeholder departments as needed. Company-wide suggestions are reviewed by the Lean team. 2. • • If OK’d, the improvement lead moves the card to the “in process” column, allocates resources, and the PDCA cycle begins. When the improvement is complete, the card is moved to the “completed” column. If not OK’d, the improvement lead contacts the employee directly and communicates why the suggestion won’t be implemented.

Recognition board includes photos of
the improvement and the suggestor’s name. Names from successful improvements go entered in a monthly drawing for prizes.

Shingo-Prize Winning Company’s Suggestion Program
For ideas that do not require help from other departments: 1. The employee completes a blue suggestion card, gets a manager’s 2. signature, and begins implementing the idea (via mini-PDCA). When the improvement is complete, the blue card is moved to the “completed column.” Recognition – – All the employees names for completed improvements (both yellow an blue) are entered into a monthly drawing for a gift card (movies, Starbucks, etc.) or T-shirt. Pictures of visual improvements with the employee’s name are placed on the “Wall of Fame.”

Obstacles to Success Problem: Workforce
remains disengaged; improvement resources are expected to “do for others” © 2010 Karen Martin & Associates 47

Breaking Old Habits Define facilitator
for all  Coach and teacher vs. “do-er” Communicate improvement resources’ roles and responsibilities Demonstrate through action Avoid having improvement professionals serve as the process owner  Audit function only to assess organizational learning, progress, and reporting © 2010 Karen Martin & Associates 48

You will learn…  How
to establish a five-year improvement plan.  Essential organization-wide learning needs.  How to accelerate results via organization-wide 5S/ Visual Management, Standard Work, & Error-Proofing activities.  The benefits of establishing a Lean Steering Committee.  How to develop a kaizen culture that generates “single hits,” while also achieving home runs and grand slams.  How to establish an infrastructure that builds organizational competencies, while generating measurable results.  The importance of building a foundation for success even if you’ve been on the Lean journey for years. © 2010 Karen Martin & Associates 49

The Transformation Process: Key Success
Factors Strong sense of urgency / burning platform Leadership alignment around strategy   Improvement priorities are closely tied to organizational strategy and annual business goals. Careful planning to avoid “implosion” and change fatigue Value-stream driven improvements. Heavy use of Kaizen Events in first 1-3 yrs. Dedicated improvement resources. Entire workforce receives exposure to Lean. © 2010 Karen Martin & Associates 50

For Further Questions Karen Martin,
Principal 7770 Regents Road #635 San Diego, CA 92122 858.677.6799 ksm@ksmartin.com © 2010 Karen Martin & Associates 51