Pg 1

The Genie in the Bottle

Implementing and Sustaining Lean

Pg 2

What We’ll Cover

1. Introduction

2. The Definition of “True North”

3. Key Philosophies Successful Lean Organizations

4. Quick review of the Toyota House

5. Discussion Activity on Why has Toyota been so successful,

and what went wrong with Toyota’s Quality?

6. Why Organizations fail in Lean Implementation

7. The Four Capabilities

8. Avoiding the 8th Waste Through Building Trust

9. Additional Tips for Sustaining your Journey

Pg 3

What is “True North”?

(1) ON DEMAND, IMMEDIATE - Pull - 0 Lead Time (2) 1 BY 1 - Batch Size of 1 - 0 Changeover Time (3) DEFECT FREE

(4) NO WASTE, LOWEST COST 1. Over production 2. Inventory 3. Defects, rework 4. Motion (Non value added) 5. Waiting 6. Conveyance, material handling 7. Processing 8. Under Utilization of People (5) SAFE - Physical - Professional (job stability, security) - Emotional (fear, threats)

Pg 4

Key Philosophies

1. The Customer always comes first (internal and external)

2. People truly are the most valuable resource

3. Kaizen (Continuous Improvement) is a way of life, not an event

4. Focus on the shop floor

Pg 5

Quick Review- The Toyota House

Pg 6

• Why has Toyota been so successful in its application of

TPS?

• Despite Toyota’s willingness to share its practices, why

do so many companies fail at Lean/TPS?

• Is there some secret to the Toyota Production System that

Toyota hasn’t shared with others?

• Is their success due to cultural differences between

Japanese and others?

• What caused Toyota’s Quality problems in recent years?

Quick Discussion…

Pg 7

• Rapid expansion in the 1980’s and 1990’s

• Technological advances in how Cars and Trucks are built.

Reasons for Toyota’s Struggle with Quality

Pg 8

The Fallen House…

l If you Google the Term “Muda” you will get 51,400,000 hits.

While at the same time, if you Google the term “Jidoka” you

only get 130,000 hits!

Just In Time: -Flow

-Takt Time

-Pull System

Leveling Standardized Work Kaizen

Pg 9

Why Organizations fail…?

-Copy lean tools only without making the work self diagnostic and

without embracing the Human side of the Lean Journey

-Working around problems even when they are recognized

-Failure to share knowledge gained throughout the Organization

-Lack of training and mentorship to enable their Teams to design

work, improve work, and implement changes based on new

knowledge

Pg 10

Reasons for Toyota’s Success

• Toyota has developed a culture where how work is performed is tightly

coupled with how that work is improved toward True North.

• Additionally, four main capabilities exist in Toyota that have allowed them

to make steady improvements over time leading to their superior

performance….

Pg 11

The Four Capabilities of the Operationally Outstanding.

Pg 12

Background

1990- The Book “The Machine that Changed the World” is

published. Based on MIT’s 5 year, 14 country study of the Auto

industry, it was the first book to examine Toyota’s Production

System.

In 1999 Steven J. Spear and H. Kent Bowen wrote a Harvard

Business Review Paper Titled: “Decoding the DNA of the Toyota

Production System.”

This paper outlined the “Four Rules” that Toyota used as the

bedrock of its production systems, and explained how these rules

are ingrained into every aspect of their organization.

“The Capabilities of the Operationally Outstanding” Are 4 key

competencies that Spear recognized as being deeply imbedded in

Toyota’s culture. These competencies are also present in other

Organizations that are successful in their Lean journey.

Pg 13

• All work is highly specified as to content, sequence,

timing, and outcome.

• Every customer/supplier connection must be direct, and

there must be a crystal clear way to send requests and

receive responses.

• The pathway for every product and service must be

specified, simple, and direct.

• Any improvement must be made in accordance with a

scientific method, under guidance of a teacher, at the

lowest possible level within the organization.

The Four Rules

Pg 14

• All work is designed so best practices are captured and

problems are evident immediately.

• Problems are immediately addressed, both to contain

them, and to trigger problem solving activities.

• Knowledge generated locally becomes systemic through

shared problem solving.

• The most senior management has to own the capability

development process.

Characteristics of a Lean Organization

Pg 15

PRESPECIFICATION AND

EMBEDDED TESTS

Making the work self diagnostic

Pg 16

VIBRATION WHEN GOING OFF THE ROAD

Prespecification

Embedded Test

Pg 17

ROTTEN EGG SMELL OF NATURAL GAS

Prespecification

- No Leaks

Embedded

Test

Pg 18

VISUAL & AUDIBLE LOW ON FUEL

Prespecification

Embedded Test

Pg 19

VISUAL SPEED MONITORING

Prespecification

Embedded Test

Pg 20

VISUAL COLOR CHANGE WITH TEMPERATURE

Prespecification

- Too hot for Baby!

Embedded Test

Pg 21

AUDIBLE WARNING VEHICLE HEIGHT

Prespecification

Embedded Test

Pg 22

PROCESS DESIGN

The Four Levels

(SYSTEMS, PATHWAYS, CONNECTIONS, ACTIVITIES)

Pg 23

System – Output “Pre-Specification”

Pg 24

System – Output “Embedded Tests”

Actual output can be color

coded as based upon a

deviation from the target.

Sounds or the visual can alert

T/L’s of abnormality.

Actual output can be color coded

as based upon a deviation from

the target. T/L would observe the

results x-times per shift for

abnormalities.

Ex. 1 – Electronic PC Board Ex. 2 – Manual PC Board

Pg 25

Pathway – Responsibility “Pre-Specification”

Ex. 1 - Production Process Ex. 2 - Quality Process

Pg 26

Pathway – Responsibility “Embedded Tests”

Ex. 2 – Sequence (Order) Ex. 1 – Who (Responsibility)

Pg 27

Connection– Handoff “Pre-Specification”

The customer (prod.) will

turn light on when materials

are needed. The supplier

(materials) will be clear that

a request has been made.

Ex. 1 - Light Signal Ex. 2 - Kanban Signal

Request for

material is

made by

placing the

empty rack in

the pre-

specified

location. The

response is to

fill the empty

rack with the

pre-specified

quantity and

return to

location.

Pg 28

Note : Further escalation could occur where a team leader is notified of the abnormality via cell, beeper, or other means.

Ex. 1 – Lights / Sounds Ex. 2 – Footprints

Connection– Handoff “Embedded Tests”

Pg 29

Activity – Method “Pre-Specification”

Example: STANDARDIZED WORK – Quality Inspection

Pg 30

Activity – Method “Embedded Tests”

Ex. 1 – Team Leader Ex. 2 – Sequence (Order)

Pg 31

Quiz Time!

Pg 32

ANDON CALL FOR PRODUCTION PROBLEMS

CONNECTION

Pg 33

SAFETY EXPECTATIONS FOR CELL

SYSTEM

Pg 34

PART TAGGED WITH INFORMATION FOR NEXT STATION

CONNECTION

Pg 35

DESIGNATION OF WHO IS RESPONSIBLE FOR WHAT ROLE

PATHWAY

Pg 36

STOCK MATERIAL ORDERING TAG

CONNECTION

Pg 37

OPERATOR TOOLING ORGANIZED FOR CHANGEOVER

ACTIVITY

Pg 38

MAINTENANCE PROCESS PERFORMANCE BOARD

SYSTEM

Pg 39

TAG USED TO ORDER REPLACEMENT MATERIAL

CONNECTION

Pg 40

OPERATOR CLEANING MATERIALS ORGANIZED

ACTIVITY

Pg 41

SHIPPING SCHEDULE

CONNECTION

Pg 42

SYSTEM OUTPUT BOARD WITH RESPONSIBILITIES SHOWN

PATHWAY

Pg 43

LOCATION DESIGNATION FOR MATERIAL CART

1.Activity 2.Connection

Pg 44

STANDARD WORK CHART

ACTIVITY

Pg 45

PRODUCTION PROCESS PERFORMANCE BOARD

SYSTEM

Pg 46

COMMUNICATION OF NEXT PRODUCTION JOB

CONNECTION

Pg 47

OPERATOR COLOR CODED CHANGEOVER TOOLING

ACTIVITY

Pg 48

PRODUCTION PROCESS PERFORMANCE BOARD

SYSTEM

Pg 49

SIGNAL THAT CHANGEOVER HAS STARTED

CONNECTION

Pg 50

1. MODIFICATION OF WORK FOR Operator # 3 & # 4

1. ACTIVITY 2. PATHWAY

2. REBALANCE OF WORK BETWEEN OPERATERS

Pg 51

OPERATOR TOOLS ORGANIZED FOR CHANGEOVER

ACTIVITY

Pg 52

Why is it Important to Categorize the Four Levels?

Pg 53

Problem Solving

Pg 54

Prevention vs. Detection

Preventing a

heart attack?

Which is better?

or Have a heart

attack and seek

treatment

afterwards?

Pg 55

Detection vs Prevention

Pg 56

Common Roadblocks to Problem Solving

l Common Roadblocks

l Problem not well defined

l Problem solving effort is untimely

l Poor team dynamics

l Participants – lack of understanding of problem solving and problem solving

techniques

l Inadequate resources allocated – not enough time

l Root cause not identified

l Management support

Pg 57

Key Element Number 1- “Go and See”

• When a problem surfaces, go to the actual workplace and see

for yourself what is happening.

-The Actual Product

-The Actual Process

-The Actual Place

-The Actual Person

-In a Timely Manner (rapid response)

• Treat the process or area where the problem is occurring as a

crime scene. (Just like CSI)

Pg 58

Key Element Number 2- Use a Scientific Method

• Toyota and other Successful Lean Organizations always use a

Scientific Method in their problem solving activities.

1. Analyze the Problem*

2. Determine Root Cause (Your Hypothesis)*

3. Implement a Countermeasure

4. What is the Expected Outcome?

5. What is the Actual Outcome?

6. What did we LEARN? ( Expected vs. Actual)

*The complexity of the problem typically determines the best approach for

analyzing the problem and determining root cause.

-Basic= 5 Why, Fishbone etc

-Advanced= Six Sigma, Point of Cause

Pg 59

1. Problem Description Problem Level (SPCA) 2. Root Cause 3. Countermeasure 4. Expected Outcome 5. Actual Outcome 6. Learning

Operator is not

able to complete

activity level

work within

designed cycle

time of 43

seconds per

standard work.

CURRENT OBSERVED

CONDITION

Placement of

parts

(orientation)

onto the poke-

yoka fixture is

awkward for

operator

causing

additional time

as detected by

the (embedded

test).

Switch fixtures

left to right for

easy installation

(natural

orientation) vs.

reversed as

currently done.

ACTIVITY

LEVEL

PROBLEM

Installation is

comfortable

for operator

and activity

can be done

within the

designed

cycle time of

43 seconds

per standard

work.

Experiments

should be

conducted

with operator

to achieve

best known

location and

orientation

for future

installations.

Then

documented

in standard

work.

Run

Experiment

CONDITION AFTER

EXPERIMENT

Unbolted

fixtures,

repositioned

and ran

experiment.

Operator

was able to

load device

comfortably

and

complete all

tasks within

41 seconds.

PROBLEM SOLVING USING THE SCIENTIFIC METHOD

Pg 60

Key Element Number 3- Low Cost, Rapid Trials

• You learn more by conducting fast, cheap experiments

• -Hold it >Tape it >Clamp it >Bolt it>Weld it

• We often jump right to welding something in place, making it

permanent before we even know if it is effective or what other

effects the countermeasure will have.

• This part of the process is a continuous cycle of the

PDCA>Learning>PDCA Cycle.

-Remember, 40 singles is always better than 4 homeruns

Pg 61

Key Element Number 4- Always toward True North

• Every new countermeasure should always improve the process

toward “True North” or the IDEAL condition

1. On Demand, Zero Lead Time

2. Single Piece Flow

3. No Defects

4. No Waste (Eliminating the 8 Wastes)

5. Safe (Physical, Emotional, Professional)

• Always update the Standards with the new knowledge and

repeat the process.

Pg 62

Sharing Knowledge

Pg 63

Yokoten

Yokoten is a Japanese term that means “Horizontal Deployment”

Successful Lean Organizations expect horizontal peer to peer

sharing of new knowledge on what the Kaizen idea was, how it

can be improved and implemented in another area.

Ways of accomplishing this can be in the form of:

- 5 Minute Team Meetings

-Team Leader / Supervisor Meetings

- Storyboards or Kaizen Boards that display the information.

- A Lessons Learned, or Better Practice Database.

- Field Trip! Go and See!

- Create a “Think Tank”. Experiment and learn what it will

take to sustain Lean in your organization.

Pg 64

Yokoten Example

Department “A” discovers a solution to a problem through Kaizen activities using the scientific method.

Department “A” shares its discovery with Departments “B” and “C”

so they can Understand, Adapt, and Apply the new Knowledge.

Pg 65

Knowing “WHY” is as important as knowing “HOW”

“With know-how, you can operate the system, but you won’t know

what to do should you encounter problems under changed

conditions. With know-why, you can understand why you have to

do what you are doing and hence will be able to cope with

changing situations.”

-Shigeo Shingo

Pg 66

Leaders are Teachers

Pg 67

The Leadership Structure

Organizations that are successful at Lean have Leaders that are

committed to the philosophy from the top down.

The people that are more senior in the organization are

responsible to develop the skills and abilities of those under

them in each of the four Capabilities.

This allows for a system that promotes effective lower level

process design, process improvement, and knowledge sharing

skills in a continuous cycle.

By doing this, Leaders help create a true Learning

Organization.

Pg 68

Something to Reflect On..

The needs of those lower in the

organization, should determine the work

of those above them, not the reverse.

Pg 69

Key Leadership Characteristics

Attention to Detail

Humility

A sense of urgency and speed to always improve performance

towards True North

Persistence

Natural Teacher, someone who can develop skills in others

One who can build trust, emotional safety in their team

Possesses a passion for the Shop Floor

Pg 70

Why Have Team Leaders?

Too many organizations view Team Leaders just as “indirect

labor”

Companies like Toyota and others that excel in Lean

understand the importance of Team Leaders and their critical

role in the process and use them extensively in their

Operations.

Team Leaders are an essential gear in the mechanism of a Lean

System. They must be present for the system to work properly.

If you are not prepared to have Team Leaders on your shop

floor at a low Team Leader to Operator ratio, then don’t pursue

a Toyota based system.. Because IT WILL NOT WORK!

Pg 71

The Golden Triangle

Pg 72

The Role of the Team Leader

Team Leaders are the front line of defense in a Lean Operating

System.

Their sole mission is to support the Operator through

responding to problems, training, kaizen, and ensuring the

Operators are able to perform according to their Standardized

Work.

The ideal ratio is typically one Team Leader for every 4-5

Operators. This allows the Team Leaders to respond rapidly to

problems and address them as they are happening.

Nested Organizational Structure

Leader’s Process Design, Problem Solving, and Knowledge Sharing skills must be very high

Department Manager

Consequently

Therefore

True North

- On Demand, Immediate

- 1 x 1

- Defect Free

- No Waste, Lowest Cost

- Safe (Physical., Emotional., Professional)

T/L

Team Leaders Role (for his/her area)

Sustain & improve system KPI’s (SQDCM) (satisfy customer = next area / process)

(A) Sustain key metrics by solving problems ( Implement embedded tests)

(B) Relentlessly Maintain and improve the current condition toward True North

Because Process Design, Problem Solving, and Knowledge Sharing skills require vast practice & OJT,

Supervisors and above must teach & develop these skills in subordinates.

T/L T/L T/L

Supervisor

Group

Team

Note: Supervisors should improve connections between Team Leaders and ensure they are cross trained.

LEADERS ARE TEACHERS AND PROBLEM SOLVERS

Team Team Team

Pg 74

Avoiding the Eighth Waste

Building Trust With Your Teams

Pg 75

WARNING!

The remainder of this presentation is rated:

R Contents may not be suitable for participants who are

uncomfortable with hearing or telling the truth, unwilling to

change their minds or behaviors, or suspicious of ideas other

than their own.

Pg 76

Why Focus On Trust?

High levels of trust lead to high performance in

teams. Research shows strong links between the

level of trust in a team and:

• More effective cooperation and collaboration

• Better knowledge transfer between team members

• Increased productivity

• More effective working relationships

Pg 77

What is Trust?

Different people look for different behaviors in others

before they will trust them. These trust behaviors can

be classified as:

Ten Criteria of Trust

Swift Trust

•Competence

•Openness with Information

•Integrity

•Reciprocity

Deeper Trust

•Compatibility

•Benevolence

•Predictability

•Security

•Inclusion

•Accessibility

Pg 78

Defining Trust

• There are two parts to trust: a feeling part that indicates trust, and a

performance track record that confirms trust.

• An active feeling of trust is confidence: in leadership, in reliability.

• A passive feeling of trust is the absence of worry or suspicion.

• Our most productive relationships are already based on trust,

sometimes unrecognized and frequently taken for granted.

• Trust, then, can be defined as confidence, the absence

of suspicion, confirmed by a track record and our ability to correct

issues.

• The track record is only a confirmation of well placed trust. If we

define trust only in relation to past events, we often will get bogged

down in stubborn unforgiveness.

• It is always more productive to correct mistakes and

miscommunications to re-build trust starting NOW!

Pg 79

Building Trust for Sustained High Performance

• Trust as a foundation for high performance means

that “Trust Comes First”

• We cannot make the plan before trust issues are

resolved, we end up dealing with symptoms not

causes and repeating problems just change names.

• You can order people to do things, but you run the

risk of getting the salute and not the heart, gaining

compliance, and not the commitment.

Pg 80

The Bottom Line of Trust

• Effective Listening is the bottom line of trust!

• If you listen, people will trust you.

• You cannot establish trust if you cannot listen!

• A conversation is a relationship, both speaker and listener play a part, each influencing the other.

Pg 81

Ten Actions Leaders Can Take To Build Trust 1. To build mistrust: Talk with others about problems you are having with a peer without

doing everything reasonably possible to solve the problem through direct communication with that peer.

To build trust: Solve problems through direct communication at the lowest equivalent level: yourself and your peers; yourself and your direct manager; yourself, your manager and their manager.

2. To build mistrust: Take credit for yourself, or allow others to give you credit for an accomplishment that was not all yours.

To build trust: Share credit generously. When in doubt, share.

3. To build mistrust: Make a pretended or “soft” commitment, e.g., “I’ll respond later.”

To build trust: When in doubt about taking on a commitment, air your concerns with the relevant parties. When engaged on as ongoing commitment, communicate anticipated slippage as soon as you suspect it.

4. To build mistrust: Manage/Supervise from behind your desk only

To build trust: Spend “informed” time mingling, asking non-assumptive questions, making only promises you can keep, working through existing lines of authority.

5. To build mistrust: Be unclear or not exactly explicit about what you need or expect. Assume that anyone would knot to do/not to do that.

To build trust: Be explicit and direct. If compromise is productive, do it in communication, not in your mind alone.

Pg 82

Ten Actions Leaders Can Take To Build Trust 6. To build mistrust: Withhold potentially useful information, opinions or action until the

drama heightens, thus minimizing your risk of being wrong and maximizing credit to you if you’re right

To build trust: Be timely, be willing to be wrong.

7. To build mistrust: Communicate with undue abruptness when others venture new opinions or effort.

To build trust: Acknowledge the intent and risk of innovation first, then address the issue with your honest opinion.

8. To build mistrust: Withhold deserved recognition at times when you yourself are feeling under-recognized.

To build trust: Extend yourself beyond your own short-term feeling and validate success or new effort.

9. To build mistrust: Hold in your mind another department’s productivity or behavior as a reason for less cooperation.

To build trust: Get in direct, tactful communication, airing your problem and seeking win/win resolution.

10. To build mistrust: Have performance evaluation time the only, or primary time for coaching input.

To build trust: Schedule regular meetings for input and feedback for those reporting to you; develop systems for floor people to evaluate coordinators, team leaders, and managers.

Pg 83

Train Your People How To Think!

• You can train people to think quality, think customer service, but

there is a difference whether these efforts come from trust and

commitment or just compliance.

• The Concept of trust is simple: build on individual confidence and

eliminate fear as an operating principle. The process is achievable,

once we understand the emotions associated with trust and

incorporate them into the following four steps:

1. Define what we mean by trust

2. Understand our “blind spots”

3. Communicate with intention, and,

4. Produce. The conversion to a team mentality is difficult because

effective teams must be predicated on trust.

Pg 84

Results

Actions

Beliefs

Experiences

The Results Pyramid

Pg 85

The most

important factor

Hardest part of the process

Real respect for all employees

Listen and be a servant leader

Respect For People

Pg 86

Employees want*: Empowerment to Make Decisions

Opportunities for Growth & Development

Variety

Mutual Support and Respect

Sense of Purpose

Desirable Future

Be an Employer of Choice

*BusinessWeek, 2008

Pg 87

Only 21% of

employees are

willing to go the

extra distance to

help company

succeed*

Firms with most

engaged employees

increase operating

income 19% and

earnings per share

28% year to year*

Employees Are Essential

*2007 Towers Perrin survey, 18 countries, 40 companies, 90,000 employees

Pg 88

“First we build people,

then we build cars.”

—Fujio Cho, Former

Chairman, Toyota

82% say

Adopting

Significant

Culture Change

is their #1

Challenge*

Change your Culture – Change your Future

*2006, The Lean Benchmark Report, AberdeenGroup

Pg 89

Employees

Middle Management/Line

Managers

Upper Management

42% say Top

Management

Commitment is #1

Challenge*

“Grow Leaders and

Teams who

thoroughly

understand the

Work, Live the

Philosophy, and

Teach it to others.”*

Turn the Company Pyramid Upside-Down

*2006, The Lean Benchmark Report, AberdeenGroup

Pg 90

Tips and Strategies' to Help You Build the Four Capabilities in Your Organization

• Obtain Process Stability, slowly over time

• Use the Model Line concept to learn how this philosophy may

fit in your organization.

• Learn and become better at the Four Capabilities BY DOING!

-No Analysis Paralysis! Don’t think too much, do a lot!

-Get as many people from different functions such as

Production, Quality, Maintenance, Engineering etc.

-Involve all the organizational levels, from the Shop Floor

to the VP

-Design the work with “embedded tests” and add Problem

Solvers (Team Leaders) to respond.

Pg 91

Some References for Further Learning

• The Toyota Way by Jeffery Liker

• The Toyota Way Field book by Jeffery Liker and

• Toyota Culture by Jeffery Liker and Michael Hoseus

• Toyota Talent by Jeffery Liker and David Meier

• To order Steven Spear’s Harvard Case Studies:

• Go to www.harvardbusinessonline.org

•

• Click on “Harvard Business School Cases” icon

•

• Use search engine feature:

•

• Steven J. Spear – access body of work and to order:

•

• Decoding DNA of the Toyota Production System

Pg 92

Questions?