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This shows how benchmarking and lean benchmarking in partciular can be applied to optimise value chains
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www.LeanBenchmark.org
Business Growth Opportunitiesthrough
Value Chain Optimisation
Presented byMark Knowlton MBA (KPS Ltd)
SUBCON 2012 NEC Birmingham Wednesday 13th June
www.LeanBenchmark.org
My Background
1979 Engineering Apprentice ,Draughtsman
1998 Plant Manager, Manufacturing Director
1990 Engineering, Project Mgt. + Lean training Uni’ of Michigan
2006 Lean Consulting
2003 Business Adviser, gained MBA
2012 Clients
www.LeanBenchmark.org
Contact Details
Contact:Mark Knowlton MBA
KPS Ltd
Tel 01843 292681Mob 07880 721471Email [email protected] Blog www.knowlton.org.ukTwitter @MarkKnowlton
www.LeanBenchmark.org
Lean/Cash flow 5 golden rulesThe 8 Lean CompetenciesSupply Chain Case Study
Benchmarking for Growth
Lean & Business Growth
www.LeanBenchmark.org
Lean/Cash flow 5 Golden rulesThe 8 Key CompetenciesSupply Chain Case Study
Benchmarking for GrowthYour Next steps?
Lean & Business Growth
Time
£
Profit
Cost Plus (In the past)
ManufacturingCost
Company Asking Price Global
Market Price
Cost Down (Now)
Profit
Value Chain Cost
End Customer Price Reductions
Internal Cost Increases
+Supplier Cost
Increases
Need for Continuous
Improvement
Pressure to reduce Costs and “Do More with Less”
Growth vs. squeeze on profit
1. Improve
2. Do nothing
3. Decline
Time
Improvement
= Your Company
= Competitor
7Do nothing = fall behind the competition as they improve !
Improve or die
www.LeanBenchmark.org
Business GrowthDefined as:
Generating significant positive cash flows for future reinvestment.
There are only two ways to grow a business…Increase turnover or Reduce costs
(or both)
So…how can ‘Lean’ be a driver for growth?
• Increase Capacity• Remove Unnecessary Cost.• Improve Customer Lead Times.• Control Inventory.• Optimise Workplace Layout & Space. • Deliver Better Quality & Service.• Empower Staff and Increase Morale • And…Improve cash flow!
A low cost approach to improvement thatallows companies to:
9
Lean…a driver for growth
www.LeanBenchmark.org
Lean improves Cash FlowHow can Lean improve cash flow?The production batch size affects everything:
Large batch sizes = higher WIP and Stock levelsMore cash required.
Small batch sizes = less WIP and less stockLess cash required.
…try the ‘Lego’ – lean simulation exercise
www.LeanBenchmark.org
Lean/Cash flow 5 golden rulesThe 8 Lean CompetenciesSupply Chain Case Study
Benchmarking for Growth
Lean & Business Growth
www.LeanBenchmark.org
Lean – impact on Cash FlowFive Golden Rules
Rule # 1 - Speed up the Order Fulfilment cycle
• From order receipt to cash in the bank• Streamline (faster) sales order processing• Map process, Identify and eliminate Waste
www.LeanBenchmark.org
Lean – impact on Cash FlowFive Golden Rules
Rule # 2 - Only make what you can sell
• Talk to your customers – what is their real demand?• Make to Order• Work towards zero stock (reduce gradually to expose hidden issues)
www.LeanBenchmark.org
Lean – impact on Cash FlowFive Golden Rules
Rule # 3 - Only buy what you need
• Local supply where possible (JIT)• Kanban replenishment system (demand driven)• Smaller quantities, greater delivery frequency
www.LeanBenchmark.org
Lean – impact on Cash FlowFive Golden Rules
Rule # 4 - Reduce Work In Progress (WIP)
• Apply lean principles, reduce batch sizes, WIP and create balance flow• Don’t start production until you have all materials• Work towards ‘single piece flow’
www.LeanBenchmark.org
Lean – impact on Cash FlowFive Golden Rules
Rule # 5 - Collect what you are owed
• Invoice immediately • Identify and fix reasons for non payment• Rigorous debt management process
Lean is a business improvement technique
focused on delivering Value to the customer
17
Lean Principles – a quick reminder…
Continuous Improvement
Respect for
People
Best Quality + Lowest Cost + Shortest Lead Time Best Safety + Highest Morale
Plan - Do – Check – Act
Lean Principles
PDCA Cycle repeated to create continuous improvement
Time
Performance
“Continuous”improvement
Plan
Do
Check
Act
1. Customer Value
2. Map the Value Stream
3. Making Value flow
4. Pull System
5. Pursue
Perfection
Lean Principles
Principles Tools & Techniques1. Customer Value SIPOC, Enhance Value Add Activity. Quality
Improvement Tools, Root Cause Analysis.
2. Value Stream Value Stream Mapping, Process Mapping, 8 Wastes, Hand off Charts, Spaghetti Diagrams.
3. Flow Load Levelling, waste reduction, 5S Workplace Organisation, Line Balancing, TPM, OEE, SMED, SOP’s
4. Pull Takt, Kanban, Visual Management
5. Perfection Continuous Improvement, PDCA, 6-Sigma, KPI’s , Knowledge Transfer
Applying Lean Tools
Overproduction
Waiting & Delays Movement of People
Inventory Over Processing Defects
Transport
Skills!
8 Wastes
TRANSPORT INVENTORYMOVEMENT
WAITING AND DELAYSOVERPRODUCTIONOVER PROCESSINGDEFECTSSKILLS
The 8 WASTES
www.LeanBenchmark.org
Cash flow 5 Golden rulesThe 8 Lean CompetenciesSupply Chain Case Study
Benchmarking for Growth
Lean & Business Growth
www.LeanBenchmark.org
8 Key CompetenciesLean is NOT just about tools and techniques!
www.LeanBenchmark.org
8 Key Competencies1. Lean Leadership2. Customer Focus3. Empowerment4. Communication5. Core Processes6. Machines and Equipment7. Support Processes8. Supply Chain
www.LeanBenchmark.org
1. Leadership• Lean strategy & objectives linked to business plan• Management visibility – “GEMBA” walks• Recognise and celebrate success.
MAS –SE Best Practice winners 2010 (Williams Renault Oxford)
www.LeanBenchmark.org
2. Customer Focus• Quality – Be proactive ,fix the root cause• Schedule completion - On Time In Full (OTIF)• Industrial marketing - Factory is a “Showroom”
www.LeanBenchmark.org
3. Empowerment• Develop motivated, Self Directed teams• Shop floor ownership of continuous improvement• Allow staff to redesign their own processes
www.LeanBenchmark.org
4. Communication• Open – two way, encourage feedback• Communications plan, daily - weekly - monthly• Team display boards
www.LeanBenchmark.org
5. Core Processes• Begin with 5S – workplace disciplines• Value Stream Mapping to identify savings
VALUE STREAM MAPPING
Step 1 Map the ‘Current State’ - Capture ideas - Identify Quick wins
Step 2 Agree the ‘Future State’ vision
Step 3 Map the ‘Future State’ processStep 4 Project ScopingStep 5 Implementation
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6. Machines and Equip’• Maintenance Plan• Daily Operator checks and Technician?• SMED + TPM
www.LeanBenchmark.org
7. Support Processes
• HR ,IT, Engineering’s role = support Manufacturing• KPI’s Balanced Score Card Approach
www.LeanBenchmark.orgBalanced Score Card example
www.LeanBenchmark.org
8. Supply Chain• Procurement Strategy, Portfolio Planning• Develop appropriate supply solutions:
Kanban - Consignment - Vendor Managed – JIT
Low
High
CRITICAL
Contingency Planning
STRATEGIC
Build Partnership
TACTICAL
Contract Out / Kanban
LEVERAGE
Short term agreements
High
VOLUME
VALUE
www.LeanBenchmark.org
8 Key Competencies1. Lean Leadership2. Customer Focus3. Empowerment4. Communication5. Core Processes6. Machines and Equipment7. Support Processes8. Supply Chain
www.LeanBenchmark.org
Cash flow 5 Golden rulesThe 8 Key CompetenciesSupply Chain Case Study
Benchmarking for Growth
Lean & Business Growth
Supply Chain improvement in action
with
MAS South EastFacilitated by Mark Knowlton
(2011)
Supply Chain Optimisation
www.LeanBenchmark.org
Background
• Request from Kent Best Practice Club members• Need to address supply chain issues• “Win-Win” opportunity• Impartial facilitator
BackgroundSupply Chain Optimisation
Group 1 – MEPSteve Poulten – MEPMark Foord -Abbey Precision Janine Jarrett -Abbey PrecisionJason Pither - Turner Tools
Group 2 – CumminsJon Huxtable - CumminsSiddharth Raote - CumminsEmma Booth - CumminsChris Johnston - Stevens & Carlotti Ian Hobbs - Stevens & Carlotti(
Group 3 – Silent GlissPaul Head – Silent GlissRob Moore - Spa Aluminium Richard Godbolt - Spa AluminiumJulie Shilling - Euromark Mark Durley – Euromark
Group 4 – Johnston SweepersSarah Hester - Jonson sweepersRichard Cardwell Jonson sweepersPhil Chapman - Kent Metal DevelopmentsMark Edge ABT - Products John Gough - ABT Products Mark Hignett - ABT ProductsDavid Simmons Hydraquip Alan Scott HydraquipGlen Baker Raker - Eng Services
Supply chain groups
1. Lean Awareness training for Suppliers2. Supplier issues identified3. Map the Value Stream4. Supply Chain issues identified.5. Agree an improvement plan
Aims and Objectives
Step 1Lean Awareness trainingfor Suppliers
Step 2Suppliers identify their own (internal)opportunities
Step 3Together identify Supply Chainopportunities.
Supply Chain Optimisation
42
Frequent deliveries Rapid deliveries JIT Service Kanban System Our new equipment Good Packing / labelling Quality Long term relationship Repeat Orders Quality of service Reliability Online Ordering
Late payment Our Suppliers Long winded ordering process Poor quality drawings Customers chasing orders Miss-picking Lack of order numbers Communication Picking errors To many people involved Order process not measured Partnership Sales order process Lack of Tooling investment
Supplier Perspective
43
Good Quality Fast turnaround Reactive Flexibility Knowledge and skills Internal improvements Lean Production Team work Low cost products Factory layout investing in equipment Good Reputation Technical Support
Reactive not proactive Some late suppliers Unreliable suppliers Stock control / ordering Slow machines Wasted movement of parts Too much paperwork Communication Scheduling Shop floor Layout Equipment reliability Need to delegate SOP’s
Customer Perspective
44
Area Issue Impact
Lead time Request to change Duplicated work + waste
Quantity Changes Increase or decrease Cost impact / Storage space
Drawing accuracy Change control, Spec, clarity Cost / Lead time / errors
Systems / Process Incompatible Lost time / Duplication
Information Missing or incomplete Lost time
Payment Late or delayed ‘On Stop’ Delays/cash flow
Key Issues Summary
“A good system to bring suppliers and customers together to improve future prospects.” Mark Edge, ABT Products.
“A great fresher – we now need to transfer to action both within our business and between our business and our customer.” Mark Hignett, ABT Products.
“Good interaction by the host companies and within the groups and subgroups.” David Symons, Hyrdaquip.
Benefits and Feedback
www.LeanBenchmark.org
SummaryInvolve your customers & suppliers in a VSM workshop
…what’s in it for them?
Health warning!• Start internally first – control the direction.• Need good customer / supplier relationships• Group session or individual workshops?
www.LeanBenchmark.org
Supply Chain OptimisationEmployee BenefitsMulti skilled team
Better sense of ownershipHigher Moral
Customer BenefitsIncreased flexibility
Fewer defects and errorsFaster, high quality of service
Supply Chain benefitsReduced cost of poor quality
Increased capacityIncreased throughput
Reduce Cost
www.LeanBenchmark.org
Cash flow 5 Golden rulesThe 8 Key CompetenciesSupply Chain Case Study
Benchmarking for Growth
Lean & Business Growth
www.LeanBenchmark.org
‘If you don’t know where you are going …any road will lead you there’
Lewis Carol
Benchmarking
www.LeanBenchmark.org
To compare against a standard point of reference
A systematic process for identifying and implementing best practice.
In practical terms…It’s about learning from the experiences of others
Purpose of Benchmarking
www.LeanBenchmark.org
Research data kindly provided by : Terry Schilling (Director) GBN
www.globalbenchmarking.org
www.LeanBenchmark.org
450 Responses 44 countries Report published by GBN in 2010
Research Sample Group
www.LeanBenchmark.org
INFORMAL - Comparing with Peers and ColleaguesActively encouraging employees to learn from the experience and expertise of other colleagues and organisations through comparing practices and processes e.g. through best practice visits, conferences, best practice websites, networking
FORMAL(a) Performance BenchmarkingComparing performance levels of a process/activity with other organisations
(b) Best Practice Benchmarking Following a structured process for comparing performance levels and learning why better performers have higher levels of performance and adapting/implementing those better practices
Types of Benchmarking
www.LeanBenchmark.org
Benchmarking vs. other Tools
Tools that are likely to increase significantly in popularity over the next three years are: • Performance Benchmarking,• Informal Benchmarking• SWOT Analysis• Best Practice Benchmarking.
Most used out of the 20 improvement tools are Mission and vision statements and Customer surveys (77%). Closely followed SWOT (72%) and then Informal Benchmarking (68%)
www.LeanBenchmark.org
• 56% Use Benchmarking
• Performance Benchmarking is the most used tool
Benchmarking Trends
www.LeanBenchmark.org
Benchmarking Trends
Growing interest in China, the Middle east and Africa
www.LeanBenchmark.org
Business Benefits
1. Improved Performance2. Improved processes3. Learning from Others4. Strategic issue addresses5. New Products and Service6. Encourage Cultural Shift7. Business Excellence
www.LeanBenchmark.org
Critical successes factors
1. Management Support.
2. Reliable comparative data.
3. Understanding own processes.
4. Clear project objectives.
5. Organisations readiness to change
www.LeanBenchmark.org
1. Management commitment is vital.2. Requires a structured approach with clear objectives3. Reliable comparative data / willing Partners essential4. Business benefits both Qualitative (Culture shift) and
Quantitative (Measurable performance gain)Benchmarking…a business improvement tool that is growing in
popularity.
www.LeanBenchmark.org
www.LeanBenchmark.org
8 Key Competencies1. Lean Leadership2. Customer Focus3. Empowerment4. Communication5. Core Processes6. Machines and Equipment7. Support Processes8. Supply Chain
www.LeanBenchmark.org
Current Users - sample
www.LeanBenchmark.org
Comparative data Manufacturing 178 (245)Healthcare 28Automotive 21Furniture 16Aerospace and defence 15Finance / Professional services 11Food and Horticulture 9Construction products 8Printing 3Marine 2Other 35
Total 295
www.LeanBenchmark.org
9%
48%
32%
11%
0 to 9
10 to 99
100 to 999
1000 to 9999
Company Size mix
www.LeanBenchmark.org
What is LeanBenchmark?
• An online tool comparing Lean performance• Assessment, Analysis, Recommendations• Personalised LeanBenchmark™ Report
66
There were a number of benefits to our organisation; this gave us independent feedback on the status of our lean implementation, it also allowed us to compare and highlight strengths and weaknesses with others in the lean community and analyse our current status.
The gap analysis offered useful suggestions for improvement projects. The assessment also focused on cultural and organisational transformation rather than just the individual uses of lean tools.
Philipp Schuell (Lean Specialist) Trumpf GmBH & SPI Lasers Ltd.
Responses from businesses…cultural transformation
Users comments
67
If you are interested in making improvements within your business then I would seriously recommend that you consider using this tool as a part of your continuous improvement tool kit. It really helped to put my company’s Lean competencies into perspective so that we could look into the future with clear goals ahead of us. Overall I am very happy with the online Lean Benchmarking tool and with the after service provided.
The questions are clear and understandable. The report generated after the questionnaire is submitted is very in-depth. All of the information and help provided is clear, down-to-earth and informative.
Keiven Smith (Project Engineer) Cobham Microwave Ltd
…clear and understandable
www.LeanBenchmark.org
Users comments
68
The benchmarking process has been really valuable, it enabled us to consider how well we are doing and where we need to focus next. It wasn’t just about seeing how well our score compared to others (although obviously this was very interesting) the recommendations within the report meant we could identify what we needed to do next.
We have now started to build our lean road map with lean objectives linked directly to the Genzyme businesses goals.
Lesley Coombes (Lean Transformation Manager) Genzyme Ltd
…see where to focus next
www.LeanBenchmark.org
Users comments
www.LeanBenchmark.org
Step 1 - Register
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Step 2 – self assessment
71
Step 3 View Results
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Step 4 – Download your Report
www.LeanBenchmark.org
and finally…Applying Lean principles for growth:• Remember the 5 golden rules to improve cash flow:
1. Speed up the order fulfilment cycle2. Only make what you can sell3. Only buy what you need4. Reduce WIP5. Collect what you are owed
• Value Stream Mapping – with Suppliers / Customers• Benchmark performance against sector competitors• Develop a growth plan, focus on 8 Lean Competencies
www.LeanBenchmark.org
Thank you…Questions?
10 FREE LeanBenchmark™ Vouchers codes available for today's delegates
(Normal online cost £99)Contact:Mark Knowlton MBA
KPS Ltd
Tel 01843 292681Mob 07880 721471Email [email protected] Blog www.knowlton.org.ukTwitter @MarkKnowlton