Creating a sustainable competitive position through a world class operating system

8/14/2019 Creating a sustainable competitive position through a world class operating system

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Time Frames

Cost

Quality

Impact may be significant, but it requires sustained efforts over manyyears EXAMPLES

Company YearsAnnualImprovement Performance Units

Omron

Toyota

7

16

7%

6%

Defects/100

Defects/100

Sollac

GE Lighting

Alcoa

12

10

7

5%

8%

5%

Cost/tonne

Cost/unit

Cost/tonne

Pechiney Aerospace

Porsche

British Aerospace

7

6

6

10%

10%

10%

Order to delivery time frame

Design to manufacture time frame

Order to delivery time frame

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Strategic link between World-class performance and world -class practicesEuropean Plants Competitiveness Study

European Plant Average ResultsThe Model

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Kobayashi was the first to create what we call roadmaps to CI

1. Cleaning and organizing2. Rationalizing the

System/Management of Objectives3. Improvement Team Activities4. Reducing Inventory (Shortening

Lead Times)5. Quick Changeover Technology6. Manufacturing Value Analysis

(Methods Improvement)7. Zero Monitor Manufacturing

8. Coupled Manufacturing9. Maintaining Equipment10. Time Control and Commitment11. Quality Assurance System12. Developing Your Suppliers13. Eliminating Waste (Treasure Map)14. Empowering Workers to Make

Improvements15. Skill versatility and Cross-Training16. Production Scheduling17. Efficiency Control18. Using Information Systems19. Conserving Energy and Materials20. Leading Technology and Site

Technology

20 Keys to Workplace Improvement

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All this originates from the Toyota Production System

Two bigcontributors:

Taichi Ohno (VP-manufacturing)

Shigeo Shingo

(consultant)


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Its not a project, it is not an initiative; it is an Operating system followedby everybody from Corporate to the shop floor

An integrated system

of principles, operatingpractices, and

elements that:

Drive the relentlesspursuit of perfectcustomer value

creation

Create leadingfinancial performanceby focusing on

relentless pursue ofexcellence

Develop world-classemployees

What itis

Just a shop floorimprovement program

A set of Kaizen events

A menu of tools andtechniques

Something that can bedelegated

What itis not

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The Operating system is built on 5 fundamental elements

2. PerformanceManagement

4. ProblemSolvingtools andtechnicalcapacities

5.ContinuousChangeMechanisms

Focus on keypriorities andstretch forresults

Skilled peopledrivingconstantimprovementand change

World classproblemsolvingapproach andtools

Coaching,capabilitybuilding, andknowledgesharing

The Brain The muscle

3. TalentManagement

The spirit The Structure

1. OperatingStrategy

The Vision

Where do wewant to go andwhy

Front lineexecution

andperformance

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An operating strategy: defining a vision for where to go and why


4. Problem

Solvingtools andtechnicalcapacities


1. Understand where we stand today2. Understand what our potential is3. Understand how do we get there and close the gap


3. TalentManagement



The Vision


Front lineexecution

andperformance

3 fundamental questions to answer

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An operating strategy supports and complements the businessstrategy

A Business strategy

Focuses on answering thefollowing 4 questions:What?: What products, what

customers, what valueproposition

Where? What regions, whatmarkets

When?: Over what period of

time, in what sequenceHow?: What business model,

where in the value chain

Determine the source ofcompetitive advantage on which

the business is to be built

Multi-annual strategic and business planreviewed and thoroughly communicated

yearly through the strategic planningcycle

An Operating strategy (for each site)

Feeds into and gets informed by thebusiness strategy by focusing on:

Current performance?: What isour performance (strengths andweaknesses) against key

benchmarks

Potential?: how good could ouroperations be (againstbenchmarks)?

How?: What is the game plan to

close the performance gap?


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Typical pitfalls in a KPI architecture

KPI used as a report procedure and not as a management tool22

Not transparent to entire organization (right info, right format, right time,right people)

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Oriented toward explaining the past, not planning the future44

Insufficient stretch targets11

Isolated exercise, not integrated into overall management processes. Nosystematic and rigorous (daily) performance management dialogue

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Not cascaded creating inconsistencies between levels / areas of theorganization

66

Improvements cannot be distinguished from simple statisticalfluctuations77

Incomplete breakdown; KPI too general to conduce to action88

Focus on limited number of variables99

KPIs not owned by key individuals1010

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Through technical limit benchmarking for each selected KPI determinesthe stretch target. No stretch, no KPI! EXAMPLE

Throughput

Time

Technical limit

Best day

Actual avg.

GapActual

Best-in-class

Stretch goal based on study of technicallimits

Throughput

Deciles

Best day

Actual avg.

Gap

Stretch goal based on historical bestperformance

30

82

87 88

95

Averageperformancelast 12months

Establishing Technical Limitations

Same plantperformance,3 best months

Any plant inthe divisionperformance,3 bestmonths

Performancetechnicallimits

Efficiency%

OptionsOptions

Best operating monthsBest operating monthsto dateto date

Composite of bestComposite of bestmonths performancemonths performance

for each keyfor each key

dimensiondimension

EngineeringEngineeringcalculationscalculations

(specifications,(specifications,physical limits)physical limits)

ILLUSTRATION

Performance shortfallPerformance shortfall

used to setused to setimprovement goalsimprovement goals

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Reduction of variation: statistical diagnostic and six sigma

Six Sigmaconcept: Makethe connectionon Critical to

Business andCritical toCustomer

What is critical???C.T.C. (Critical to Customer)

C.T.Q. (Critical to Quality)

C.T.P. (Critical to Process)

Up to control loops

Customer FocusReduction of variation is a systematic

process of improvement focus totally on

customer.

The concept behind the six sigma diagnostic


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The Operating system is built on 5 fundamental elements


4. ProblemSolvingtools andtechnicalcapacities


Focus on keypriorities andstretch forresults

Skilled peopledrivingconstantimprovementand change

World classproblemsolvingapproach andtools

Coaching,capabilitybuilding, andknowledgesharing


3. TalentManagement



The Vision


Front lineexecution

andperformance

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Execution is king

Only 5 percent of theorganizations in the West truly

excel. Their secret is not what theydo, but how they do it.

H.J. Harrington

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Improvement Trend

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Experience has shown

Best performing plants have the best results Average performing plants have average results Low performing plants have the worst results

The reverse of their potentialIts a DNA thing


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What Makes the Difference ?

The genetics of your plants

The DNA Factors

So how do we get started?

Iterative process that will be continuously improved

Will not be linear: all elements of a CI program are tackledsimultaneously and improved by doing; learn by doing

Pareto (80/20) is king BUT relentless pursue of improvement is notnegotiable.

Good enough is NOT good enough: stretch, stretch, stretch:willingness to accept trial and error process

Everybody is involved: walk the talk, management leads byexample; line operators solve the problems

Every aspect of the organization will be touched: profitability,productivity, quality, customers, compliance, growth.

The Operating system is a journey not a project

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Key success factors for launching a CI implementation

Strong leadershipand vision

Strong leadership

and vision

Rigorous management byobjectives (stretch targets)

Visibility and commitment (this isfor real)

Walk the talk Communicate message

continuously

Rigorous management byobjectives (stretch targets)

Visibility and commitment (this isfor real)

Walk the talk Communicate message

continuously

All of theseelements need to

be there to make itsuccessful

Local talent with

passion

Local talent withpassion

Local black belt with conviction Local championship with clear

mandate

Full commitment; credibilitywithin the organization

Local black belt with conviction Local championship with clear

mandate Full commitment; credibility

within the organization

Willingness to

invest

Willingness toinvest

Create a mandate Bring capabilities in Have fully dedicated working

teams Train and coach

Create a mandate Bring capabilities in Have fully dedicated working

teams

Train and coach

Documents

Creating a sustainable competitive position through a world class operating system