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MICHAEL ORAN 3
BUSINESS EXCELLENCE VISION
•EXCELLENCE is achieved when:a company continuouslyIMPROVES and EXCEEDSthe “Quality, Cost, and Delivery Requirements to its Customers.
•COMPONENTS for EXCELLENCE are:1. Leadership & Culture
2. Lean, Flexible & Disciplined Organization
3. Proper Tools, Methods, Techniques
MICHAEL ORAN 4
BUSINESS EXCELLENCE OBJECTIVE
To create and implement business solutions with:
• Systems thinking
• Customized to the needs of our Clients
• Achieve top and bottom-line results, such as:
– Increased Profits, Revenue
– Reduced Cost, Improved Cash Flow
– Improved Quality & Productivity
– Improved Equipment Management
– Better Customer Focus
MICHAEL ORAN 5
DEFINITION OF LEAN• LEAN means that we continuously REDUCE WASTE
– Waste in Concept To Launch
– Waste In Manufacturing
– Waste in Order to Cash
• LEAN means that we consistently RENEW THE BUSINESS
– Flexible to adapt and diffuse new technologies
– Change methods for the better
– Become modular and scalable - right sized machines & designs
– Launch faster with consistent quality – time to market
• LEAN means that we are SUSTAINING & CONSISTENT
– Working according to the policies and schedules
– Delivering according to schedules
From START to FINISH
MICHAEL ORAN 6
• (Cont’d)
• LEAN means that groups of CAPABLE, ENABLED, and Continuously LEARNING PEOPLE are working together
– Motivated and
– Capable and enabled people for independent decision making
• LEAN means CONSISTENTLY EXCEEDING CUSTOMER EXPECTATIONS
– Exceeding the Known requirements
– Anticipating the Unknown requirements
– Understanding the Latent requirements
DEFINITION OF LEAN
MICHAEL ORAN 7
WHY CANADA NEEDS CHANGE• Canadian controlled plants are 30% less productive than
foreign controlled Companies operating in Canada
• Canadian firm’s profit margin is about 75% of US counterparts
• Profits need to be generated through cost reduction,not only through price increase and margin squeezing
• Customers want “Solutions on their terms, according to their Timeline, Quality & Quantity Delivery”
• Over time, organizations have become unsuspecting of their own “Waste – Hidden Factories”
• We cannot depend on the old “Success Formulas”
– Improving Economies
– Returning Reasonable Customers
– Exchange Rates
– Exit of weak competitors Source;Consortium for Advanced Manufacturing,Next generation Manufacturing Systems, Leaders for Manufacturing Program, MIT
MICHAEL ORAN 8
FOUNDATION
BUSINESSEXCELLENCE
STRATEGYLean Leadership Culture
STRUCTURELean Organization
STRENGTHLean Techniques & Methods
Methods & Tools
Goals& Targets
People & Teams
MICHAEL ORAN 9
• From “Policy Deployment” to “Policy Management”
• From “Top-down Cascade of Tasks” to Emergence of policies based on “cascade of responsibility”
• Gets the desired direction without anyone telling anyone exactly what to do
• Maximum Flexibility with Maximum Control
• Flexibility with responsibility to think and initiate
• Control with need to justify each action
STRATEGY
MICHAEL ORAN 10
STRATEGY (cont’d)
LEADERSHIP & CULTURE:Evaluate to define the New Behaviors Required by the Strategy
CREATING VALUE:• Customer-focused; Understands customer; solves customer problems
• Innovative; Challenges assumptions; proposes new ways
• Delivers Results; Produces results for Customers and Shareholders
EXECUTING STRENGTH:• Understands Strategy; understands the mission, vision, values, and strategy
• Accountable; Defines direction, targets, and accountability
• Open Communications; creates clear communications and feedback
• Teamwork; works across boundaries, shares knowledge
MICHAEL ORAN 11
PEOPLE
InvolvementPrograms
Human ResourcesManagement
Work Systems andStandardization
Suggestion Programs
QC Circles
Empowerment Programs, (Enabling)
Employees as Citizens
Employee Development
Rewards and Recognition
Standardized Work/Kaizen
Responsibility pushed down
JIT/Automation with Human TouchRespect for People
PEOPLE SYSTEMS FOR BUSINESS RENEWALLEAN EXCELLENCE
MICHAEL ORAN 12
ALIGNMENT
Plans are things that change
Plans are things to adhere to
CONVENTIONAL BUSINESS EXCELLENCE
•GOAL Oriented
•Responsibility Focus
•Individual Initiative
•System or ProcessLevel Response
•TASK Oriented
•AUTHORITY Focus
•Upper-Level Control
•IndividualLevel Response
TARGETS vs. GOALS
MICHAEL ORAN 13
HIGH TECHNOLOGY
LOW TECHNOLOGY
TECHNOLOGYLEVEL
PREFERREDPROCESS
END PRODUCT
PEOPLE ORIENTED
LEAN
LEAN ORIENTED PRODUCT
TECHNOLOGYORIENTED
INNOVATION
TECHNOLOGYORIENTED
LEAN
INNOVATIVEPRODUCT
With LEAN ORIENTATION
RENEWAL
TECHNOLOGY & BUSINESS RENEWAL
MICHAEL ORAN 14
REASONING
COST
ProfitProfitProfitProfit
COST
DIMINISH AND ELIMINATE YOUR HIDDEN FACTORY
COST
ProfitProfitProfitProfit
COST
Profit = Price – Cost
Work = Capacity – WastePrice = Cost + Profit
Capacity = Work + Waste
TRADITIONAL THINKING
LEAN BUSINESS EXCELLENCE THINKING
HIDDEN
MICHAEL ORAN 15
EFFECTS OF WASTE REDUCTION
1.0 M
REVENUES
PROFITS
Waste = 100,000
200,000
To get 200,000Into Bottom Line@ 10% Margin
Without Reducing Waste
2.0 M
REVENUESNEED
TODOUBLED
1.0 M
100,000
PROFITS
MICHAEL ORAN 16
EXCELLENCE TARGETS
IdealState
CurrentState
FutureState
Identify Value, Eliminate Waste
Create Flow
Create PULLLevel the Load
Waste = ZeroResponse Time = Zero
ONE PIECE FLOW(6 Sigma)(TPM)(right-sized tools)
UPSTREAMDOWNSTREAMLEVELED LOADONE PIECE FLOW(6 Sigma)(TPM)(right-sized tools)
FOR PROCESSES
Capable – right every time (6 Sigma)Available – always able to run (TPM)Adequate – with capacity to avoid bottlenecks (right-sized tools)
MICHAEL ORAN 17
DO YOU ASK THE RIGHT QUESTIONS?
• Does my value-added activity consumeless than 5% of the total process time?
• What is my competitive advantage gainif I deliver in 50 to 80% less time?
• What financial gain would I realize witha 20% reduction in cost of quality?
• What cash infusion / debt reduction wouldI gain with a 50-80% reduction in work-in- process and finished good inventory?
• What revenue growth would I realize byreducing delivery time and time-to-market?
MICHAEL ORAN 18
PLANT SUPPLY CHAIN
CURRENT STATE FLOW & PULLCOMPRESSED LEAN (Process Lead Time)
BEYOND THE WALLS
A “price of admission” to the value stream team, requiring little time and practically no capital. (1% to 3% of existing staff)
A logical step that requires a lot of knowledge (training-workshops and execution) but not much capital.
A logical step that requires a some additional knowledge (training-workshops and execution) and some capital, but not too high.
Huge undertaking requiring capital, cost reduction and strong collaboration between Customer’s and Suppliers but potentially a “change in strategic position in the market, and Customer Perception” for every company participating in the value stream!
FROM BATCH TO DEMAND DRIVEN
MICHAEL ORAN 19
1. DAY 1
• Plant Tour (Initial, pre-assessment)
• Team Assessment
• Assessment Compilation
2. DAY 2
• Second Plant Tour for Waste
• Waste Recommendations
• Report and Presentation to Management
INITIAL VISIT - ASSESSMENT
MICHAEL ORAN 20
THE ASSESSMENT
Tools &
Techniques
(strength)
Organization
(structure)
Leadership &
Culture
(strategy)
1
2
3•Production•Equipment•Engineering
•Managing the Renewal•Employee & Supplier Partnering •Information Architecture
•Customer Focus•Business Renewal•Culture of Improvement
MICHAEL ORAN 21
THE ASSESSMENT EXPLAINEDS
UB
-HE
AD
ING
SU
B-H
EA
DIN
G
-
DE
SC
RIP
TIO
N
ExcellenceMaturityDevelopStartMass
EACH “CUBE” HOLDS A UNIQUE STATEMENT
WHICH DESCRIBES THE CONDITION
AT EACH LEVEL BETWEEN
MASS & EXCEL
YELLOW - BLUE - TURQUOISE CUBES
HAVE “NO” SIGNIFICANCE
OTHER THAN
TO SIMPLIFY THE OVERALLSURVEY READING
INTRO
ExcellenceMaturityDevelopStartMass
MAJOR HEADING
1
ExcellenceMass
MICHAEL ORAN 22
ASSESSMENT SAMPLE
There is a clear link between long
and mid range plans and all is
supported by Plan Do Check Act
cycle application
Short and mid term plans and their execution are consistently
successful but the link to long-range
is weak
Policies define clearly targets and
means but the results to targets of
the whole work environment as a team is not there
yet
Policies are not clear and plans
are not streamlined yet
No long range plans
Core Competencies are
understood - capabilities and
fitting the market is much more
aligned
Core Competency Analysis starts
Limited knowledge of
core competencies
Company is in tune with its
capabilities and core
competencies - leading in core competencies
Company easily assimilates new
methods, systems and technologies - Benchmarking is
above industry average
3 or 5 year strategic plans are based on modeling and
scientific
Information gathering process
for the 3 year plans is started
Vision is constant, no change, it is
single model
Management is efficient and a subject matter
expert in modeling
Management is fully competent in "what-
if and change scenarios" (may
include the use of computer modeling)
Top management starts to "anticipate
changes" in business as a result
of strategic response
(alignment)
Top Management starts the "what if
scenarios" for better business
models
The future is not modeled or modeling of
future is very unsystematic;
Bu
sin
ess
Ren
ewal
Co
ntin
uo
us
Imp
rove
me
nt
to B
usi
ne
ss
1
Mass Start Develop Maturity Excellence
BUSINESS RENEWAL (Flexibility / Agility)
MICHAEL ORAN 23
REPORT-CARD ON GAP
0.73
0.39
1.59
1.36
1.19
1.20
0.89
1.40
0 0.5 1 1.5 2 2.5 3 3.5 4
Customer Focus(Information Management Loop)
Business Renewal(Flexibility, Agility)
Culture of Improvement(Problem Solving Loop & People)
Managing Renewal(People, Organization, Pay-Performance &
Reward-Recognition Systems)
Information Architecture(People & Performance)
Production(VA-process, Lgstc&Info-Management,
Physical-Transformation Loop
Equipment Management(Physical Transformation Loop)
Engineering(Concept to-Launch-Product & Process
Problem Solving Loop)TO
OL
S &
TE
CH
NIQ
UE
Ss
tre
ng
thO
RG
AN
IZA
TIO
Ns
tru
ctu
reL
EA
DE
RS
HIP
& C
UL
TU
RE
str
ate
gy
MASS START DEVELOP MATURITY EXCEL
Business Excellence Gap
GAP
MICHAEL ORAN 24
PLANT
CURRENT STATE FLOW & PULL COMPRESSED LEAN (Process Lead Time)
A “price of admission” to the value stream team, requiring little time and practically no capital. (1% to 3% of existing staff)
A logical step that requires a lot of knowledge (training-workshops and execution) but not much capital.
A logical step that requires a some additional knowledge (training-workshops and execution) and some capital, but not necessarily too high when machinery and equipment modifications are not required.
•25% in FGI
•50% in WIP
•25% in Lead Time
•60% in FGI
•80% in WIP
•50% in Lead Time
•The entire value stream is now running make-to-order rather than make-to-forecast.
•50% to 75% of wasted steps are eliminated
•Throughput time reduced by 80 to 90% of the of initial-state time,
•Acceptable wait time of the customer;
•20% increase in productivity
•30% increase in Productivity
•High Visibility
•Low number of Transactions
•Make LEAN STANDARD
•LEAN INFRA-STRUCTURE
•Demand amplification is virtually nil.
•Quality is higher and consistent from start to finish, (Detect and Prevent, 5.5 sigma +).
•Transport links and information needs shrink dramatically (triggers and information).
THE SCORECARD FOR BUSINESS EXCELLENCE
MICHAEL ORAN 25
END OF ASSESSMENT DELIVERABLES
• Assessment – recommendations on the Gap to Excellence
• Report on Observed Waste, including the savings
• Blueprint for Excellence Program, Future State
• Training Plan for Excellence
• Documents & Metrics Verification Report
THE BUSINESS EXCELLENCE PROGRAM
WE PRESENT THE BUSINESS EXCELLENCE PROGRAM
WE PERFORM
BUSINESS EXCELLENCE ASSESSMENT &
WASTE AUDIT
WE RECOMMEND IMMEDIATE PROJECTS
TRAINING & WORKSHOPS
LEANPROGRAMS
WE BLUEPRINTFUTURE STATE
CO
NTIN
UO
US
LEA
RN
ING
& G
RO
WTH
MICHAEL ORAN 26
7% No Answer
4% EXCELLENCE - AdvancedLean has become the standard way of operating; employees, supervisors,
and managers understand and use Lean concepts; Lean is being extended
to Strategic Suppliers
28% MATURITY - ExtensiveImplementation is underway; many areas of the business are applying many
Lean concepts and tools; solid progress being made
46% DEVELOPMENT - EarlyJust starting to implement in pilot areas; some positive results
18% START - PlanningNo implementation
PHASES OF LEAN BUSINESS EXCELLENCE
CURRENT INDUSTRY PROFILE
(LEI Survey 2003, 2004)
MICHAEL ORAN 27
TEAMING UP for EXCELLENCE
Kaizen Focus
5S5S Set-upSet-up FlowFlow
Defect/Variation
Defect/Variation
TPMTPMBusinessProcess
BusinessProcess
Site Assessment
Value StreamMapping
Vision/Strategy Business
Objectives
360 DegreeCommunication
Agenda
Lean Training1) Executive 2) Champion 3) Lean Consultant
CEO and Senior Management
MICHAEL ORAN 28
BENEFITS OF OUR SERVICES
FINANCE YOUR OWN CONVERSION
TO EXCELLENCE
WITH US
RESPOND TO CHANGING
CUSTOMER VALUES
MICHAEL ORAN 29
OUR OWN - SCORE CARDSome of our Lean, Supplier Development and Continual Improvement
efforts;
• QFD, Design Review 2004 Canada, US
• TPS - Project Management 2003, 2004 Canada
• Controlled Shipping 2003 GM, 3rd Party, US&CDN
• 5S-Visual and Blitz 2002, 1996, 1997 US, Canada, England
• Corrective Actions 2001 Canada
• New Plant Launch - Engines 2001 Canada
• Constraints Management 1999 US
• Process re-engineering (JIT) 1996 - 97 Canada, England
• Process Start Ups (JIT) 1996 – 97& 98 Canada, China
• JIT- Kanban & Pull 1996 – 97& 98 Canada, England, China
• QS 9000 (Q1, Q101) 1996 – 97& 98 Canada, Italy, China
• TPM 1996 Canada
• Training 1987 to date US, Canada, China
• Continuous Improvements 1985 to date US, Canada, England, China
• Error-Proofing (Prevention) 1995 to date US, Canada, England
• Problem Solving 1985 to date US, Canada, England
MICHAEL ORAN 30
TRAINING - KNOWLEDGE TRANSFER
• Customer Focus
• Reach the Person
• Match the Next Economy
• Train for Business Impact
• Build the Capacity to Learn
• Pre-Post Assessment forKnowledge Inventory
• Post Training Action Plan Evaluations for Achievementsbased on knowledge learned
• Technology is central
– For going to scale
– Consistency
– System Preparedness
MICHAEL ORAN 31
SERVICES FOR BUSINESS EXCELLENCESCOPE FOCUS ACTION ITEMS – OUR DELIVERABLES
BUSINESS CONSULTING
EXECUTIVE AUDITS BUSINESS EXCELLENCE ASSESSMENT
STRATEGIC - POLICY DEPLOYMENT CONTINUOUS IMPROVEMENT (CI) DEPLOYMENT
LEAN BUSINESS SUPPORT – HRM SYSTEMS
REWARDS & RECOGNITION SYSTEMS IMPLEMENTATION PROGRAM
SUGGESTION SYSTEMS IMPLEMENTATION PROGRAM
PERFORMANCE EVALUATION SYSTEMS IMPLEMENTATION PROGRAM
LEAN LAYOUT DESIGN
OFFICE & ADMIN LAYOUTS DEPARTMENT LAYOUTS & OFFICE CELLS
MANUFACTURINGFACILITY PLANNING & DESIGN
WORKCELLS AND LINES PLANNING & DESIGN
LEAN MANUFACTURING EXCELLENCE
KAIZEN EVENTS FOCUSED EVENT TO REDUCE WASTE or CI
MANAGING THE SHOP FLOOR IMPLEMENTATION PROGRAM
VALUE STREAM MAPPING CLASSROOM TRAINING & WORKSHOPS
REDUCING THE WASTEQUICK CHANGE OVERS, ERROR PROOFING, LEAD TIME REDUCTION WITH CLASSROOM TRAINING -WORKSHOP AND IMPLEMENTATION PROGRAM
5S SYSTEMSCLASSROOM TRAINING -WORKSHOP AND IMPLEMENTATION PROGRAM
VISUAL SYSTEMSCLASSROOM TRAINING -WORKSHOP AND IMPLEMENTATION PROGRAM
FLOW - PULL – LEVEL SYSTEMSKANBAN – SUPERMARKET SYSTEMS WITH CLASSROOM TRAINING -WORKSHOP AND IMPLEMENTATION PROGRAM
LEAN QUALITY SYSTEMS
DEFECT REDUCTION & ERROR PROOFING; SPC, PFMEA
CLASSROOM TRAINING & WORKSHOPS
LEAN ENGINEERING SYSTEMS
QFD – QUALITY FUNCTION DEPLOYMENT & DR – DESIGN REVIEW PROCESS; APQP, DFMEA; CONCURRENT ENGINEERING
CLASSROOM TRAINING -WORKSHOP AND IMPLEMENTATION PROGRAM