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Integration of Lean Six Integration of Lean Six Sigma into a Small to Sigma into a Small to

Medium Sized EnterpriseMedium Sized Enterprise

Jon G. EliaJon G. Elia

Director, ManufacturingDirector, Manufacturing

Quality Assurance & Business ExcellenceQuality Assurance & Business Excellence

HEB Grocery CompanyHEB Grocery Company

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Main PointsMain Points

Overview of HEB?Overview of HEB? Why Lean Sigma is so vital to our futureWhy Lean Sigma is so vital to our future Successes and pitfallsSuccesses and pitfalls Top 10 Learnings from the past 5 yearsTop 10 Learnings from the past 5 years

Pitfalls, Corrective Actions and OpportunitiesPitfalls, Corrective Actions and Opportunities

Recommended readingRecommended reading

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Howard E. Butt Howard E. Butt Grocery CompanyGrocery Company

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Florence ButtFlorence Butt

Opened First Store in 1905Opened First Store in 1905 Support 3 sons & ill husband Support 3 sons & ill husband Two story structureTwo story structure

11stst story – store story – store 22ndnd story – residence story – residence

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Our First Store (1905)Our First Store (1905)

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Today’s StoresToday’s Stores

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We Are Proud of Our Company!We Are Proud of Our Company!

Proud of our beginnings & accomplishmentsProud of our beginnings & accomplishments Privately owned and operatedPrivately owned and operated 300+ stores (TX & Mexico)300+ stores (TX & Mexico) $12 Billion annual sales$12 Billion annual sales 60,000 “Partners”60,000 “Partners” 3 new HEB “Plus” stores 20053 new HEB “Plus” stores 2005

170,000 Sq. Ft.170,000 Sq. Ft. 40,000 new items40,000 new items

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Why Do I Tell You Why Do I Tell You This?This?

Despite all we’ve done, it’s not enough!Despite all we’ve done, it’s not enough!Paradigm has shifted in food retailingParadigm has shifted in food retailing

Everyone goes back to zero!Everyone goes back to zero!

Our industry is changing and so must we!Our industry is changing and so must we!

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The Enemy of Great is Good!The Enemy of Great is Good!James Collins in “Good to Great”James Collins in “Good to Great”

HEB’s Bold Promise:HEB’s Bold Promise:““H-E-B Partners taking a stand together H-E-B Partners taking a stand together to build the greatest retailing company”to build the greatest retailing company”

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Learning #1Learning #1

““Good just ain’t good enough!” Good just ain’t good enough!” (Texican speak)(Texican speak)

““Our successful past guarantees nothing Our successful past guarantees nothing Our future depends on:Our future depends on:

Continuous & breakthrough improvementsContinuous & breakthrough improvements

Corrective Action: Corrective Action: Business Excellence approachBusiness Excellence approach Greatly increases our chances for successGreatly increases our chances for success

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Why Lean Six Sigma? Why Lean Six Sigma?

Marriage made on earth, but it’s great!Marriage made on earth, but it’s great! We started with “Six Sigma”We started with “Six Sigma”

Averaged $79,000 per GB student in savingsAveraged $79,000 per GB student in savings Something was missing, but what? Something was missing, but what?

Learned about Lean Learned about Lean (called it “Lean Sigma”)(called it “Lean Sigma”) We married the two and changed the We married the two and changed the

name to “Business Excellence”name to “Business Excellence” More flexible, use any tools & techniquesMore flexible, use any tools & techniques

Birth of Business Excellence Team (BET) Birth of Business Excellence Team (BET)

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Learning #2Learning #2

Why reduce variation & optimize a Why reduce variation & optimize a process (Six Sigma) that you shouldn’t be process (Six Sigma) that you shouldn’t be doing in the first place (Lean)?doing in the first place (Lean)?

Corrective Action: Corrective Action: Identify & eliminate Muda (with Lean), then Identify & eliminate Muda (with Lean), then Reduce variation and optimize processReduce variation and optimize process

(with Six Sigma)(with Six Sigma)

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What does What does BETBET do for HEB? do for HEB?

Increases profits in a Pennies Business!Increases profits in a Pennies Business! By improving quality, cost & service,By improving quality, cost & service, Normally, without having to:Normally, without having to:

• Increase revenuesIncrease revenues• Work any harderWork any harder• Cut heads or careers Cut heads or careers • Make major capital investmentsMake major capital investments

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Business ExcellenceBusiness Excellence

Benefits Our CustomersBenefits Our Customers

Customer defines value (Lean 101)Customer defines value (Lean 101) We must provideWe must provide

Outstanding shopping experiencesOutstanding shopping experiences• Clean, well organized storesClean, well organized stores• Quality productsQuality products• Great serviceGreat service• Lower prices Lower prices • Products on the shelfProducts on the shelf

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Business ExcellenceBusiness Excellence Benefits Our PartnersBenefits Our Partners

Safety Safety Higher Morale Higher Morale Education & trainingEducation & training Improves ProductivityImproves Productivity Increases Job Security Increases Job Security Better pay and benefitsBetter pay and benefits The power is in the The power is in the

workforce!workforce!

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Learning #3Learning #3

The power is in our people! With every pair of The power is in our people! With every pair of hands comes a free brain! hands comes a free brain!

Corrective Action:Corrective Action: Education & Training Education & Training Intrinsic motivationIntrinsic motivation Get all employees in the game!Get all employees in the game! Imagine 60,000 Imagine 60,000

• well educatedwell educated• properly trained brains with 120,000 handsproperly trained brains with 120,000 hands• working toward the common goal ofworking toward the common goal of• Business Excellence (Lean Sigma)Business Excellence (Lean Sigma)

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Typical Organizational ChartTypical Organizational Chart

Person 1Person 1Person 1Person 1Person 1Person 1 Person 2

Without Partners’ heads in the game our success will be very limited!

Traditional Organizational Chart

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Business ExcellenceBusiness Excellence Benefits Our OwnersBenefits Our Owners

Increases profits from existing salesIncreases profits from existing sales Helps generate new sales & higher marginsHelps generate new sales & higher margins Cash flow machineCash flow machine Creates capacity without capitalCreates capacity without capital Develops more powerful workforce with Develops more powerful workforce with

untapped potentialuntapped potential

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We’ve Experienced We’ve Experienced Numerous Successes in MfgNumerous Successes in Mfg

Productivity improvementsProductivity improvements 30-40% are becoming more and more common30-40% are becoming more and more common Several over 100%Several over 100%

Changeover reduction examplesChangeover reduction examples 1.5 hrs to 30 minutes1.5 hrs to 30 minutes 3-5 minutes to less than 10 seconds 3-5 minutes to less than 10 seconds (30+ times/day)(30+ times/day)

Capacity increases:Capacity increases: 33% without additional capital investment33% without additional capital investment

Culture change:Culture change: 8 weeks in one plant that has sustained it for 3 years8 weeks in one plant that has sustained it for 3 years

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SuccessesSuccesses

TransportationTransportation Turn around time for maintenance reduced from days Turn around time for maintenance reduced from days

to hoursto hours Reduction of in operable trailers reduced from 103 to Reduction of in operable trailers reduced from 103 to

3 per week3 per week RetailRetail

Reduced inventory in frozen food MT 50%Reduced inventory in frozen food MT 50% Increased utilization of space in warerooms (30-50%)Increased utilization of space in warerooms (30-50%)

DistributionDistribution Reduced miles in the yard between plants & Reduced miles in the yard between plants &

warehouseswarehouses Trailer turn around time greatly reducedTrailer turn around time greatly reduced

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Successes Are EasySuccesses Are Easy

We’ve had many We’ve had many We’ve also had failures & regressionWe’ve also had failures & regression Land mines are everywhere but,Land mines are everywhere but, We continue to learn & respond to resultsWe continue to learn & respond to results Learning to go for the “High Hanging Fruit”Learning to go for the “High Hanging Fruit” Let’s continue with our LearningsLet’s continue with our Learnings

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Learning #4Learning #4

Lean Sigma is an “in the weeds” process. Lean Sigma is an “in the weeds” process. Making it too complicated severely restricts your Making it too complicated severely restricts your ability to engage the entire workforce.ability to engage the entire workforce.

Corrective Action:Corrective Action: 80+% of our opportunities require 8-10 “grass roots” 80+% of our opportunities require 8-10 “grass roots”

tools. These tools will carry us for years.tools. These tools will carry us for years. The tools and process need to fit your organization.The tools and process need to fit your organization. Simplify the tools so everyone can participate.Simplify the tools so everyone can participate. Don’t let the process intimidate the workers Don’t let the process intimidate the workers

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How It All Began at HEBHow It All Began at HEB

Two Partners trained as Six Sigma BB’sTwo Partners trained as Six Sigma BB’s 6 months, $25,000 expense, $250K 6 months, $25,000 expense, $250K

projectproject Conclusion: This approach is not HEBConclusion: This approach is not HEB

Too stressful, costly, & difficultToo stressful, costly, & difficult Haven’t needed most of the statistical toolsHaven’t needed most of the statistical tools No Lean content whatsoeverNo Lean content whatsoever

We heard about a better wayWe heard about a better way

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How We Got StartedHow We Got Started

Engaged a local Lean Sigma CoachEngaged a local Lean Sigma Coach Revised our Strategic Leadership PlanRevised our Strategic Leadership Plan

Need, Vision, and PlanNeed, Vision, and Plan

Customized the training materials for HEBCustomized the training materials for HEB Educated all salaried Partners firstEducated all salaried Partners first Established the Business Excellence TeamEstablished the Business Excellence Team Started training Green Belts (grass roots)Started training Green Belts (grass roots) Learned to ask the right kind of questionsLearned to ask the right kind of questions

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Learning #5Learning #5

““Teach everyone to ask the right questions.” Teach everyone to ask the right questions.” Which questions are better?Which questions are better?

Why am I overweight? Why am I overweight? OrOr How can I lose weight and enjoy the process?How can I lose weight and enjoy the process? Why is Lean Sigma so complicated? Why is Lean Sigma so complicated? OrOr How can we make it “grass roots” and enjoyable?How can we make it “grass roots” and enjoyable?

Ask how we can, not why we can’t!Ask how we can, not why we can’t!

Corrective Action: educate, train and expect Corrective Action: educate, train and expect everyone to ask the right kind of questions.everyone to ask the right kind of questions.

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The Approach Is Important! The Approach Is Important!

Top-down & bottom-up Top-down & bottom-up (squeeze the middle)(squeeze the middle)

Senior Leadership Senior Leadership Commitment Commitment && Support Support

Self-directed teams are best Self-directed teams are best SIMPLE SIMPLE Continuous Improvement ProcessContinuous Improvement Process

Continual feedback loopsContinual feedback loops Accountability at all levelsAccountability at all levels

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Business Business ExcellenceExcellence

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VALUE STREAM MAPPING

CHANGE MANAGEMENT & LEADERSHIP COMMITMENT

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Leadership vs. ManagementLeadership vs. Management Traditional Management isn’t good enoughTraditional Management isn’t good enough Our #1 resource is peopleOur #1 resource is people People have needs that Leaders must satisfy!People have needs that Leaders must satisfy! People usually leave leaders, not companies People usually leave leaders, not companies 6 Human Needs 6 Human Needs (read Tony Robbins)(read Tony Robbins)

CertaintyCertainty UncertaintyUncertainty Love & connectionLove & connection GrowthGrowth SignificanceSignificance ContributionContribution

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Learning #6Learning #6

Business Excellence requires everyone to Business Excellence requires everyone to be engaged to achieve maximum success.be engaged to achieve maximum success.

Corrective Action:Corrective Action: Today’s workforce responds best to Today’s workforce responds best to LeadershipLeadership Be a “coach”: (mostly leader, part manager)Be a “coach”: (mostly leader, part manager) Fulfill the 6 Human Needs Fulfill the 6 Human Needs

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Leadership & DisciplineLeadership & Discipline

Business Excellence is more about Business Excellence is more about LeadershipLeadership and culture of and culture of DisciplineDiscipline than it is about tools and techniques! than it is about tools and techniques!

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Learning #7Learning #7

Trying to “change the culture” before Trying to “change the culture” before changing the “behaviors” and “attitude” changing the “behaviors” and “attitude” is futile.is futile.

Corrective Action:Corrective Action: Understand Cognitive DissonanceUnderstand Cognitive Dissonance Behavior Behavior Attitude Attitude Culture Culture Seat belts: great exampleSeat belts: great example Implement 5S or 6S (includes safety)Implement 5S or 6S (includes safety)

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Learning #8Learning #8

Gemba is where leaders should be, not their Gemba is where leaders should be, not their offices, applying the Gemba Principles.offices, applying the Gemba Principles.

Corrective Actions: Corrective Actions: (Gemba is the workplace)(Gemba is the workplace) Gemba-walks: true leaders do several times per dayGemba-walks: true leaders do several times per day Apply Gemba Principles when abnormalities occurApply Gemba Principles when abnormalities occur

• Go to gembaGo to gemba• CheckCheck on failures, rejects, unsafe conditions on failures, rejects, unsafe conditions• Take temporary Take temporary countermeasurescountermeasures immediately immediately• Identify and remove the Identify and remove the root causeroot cause• Standardize the workStandardize the work to prevent recurrence to prevent recurrence

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Value StreamsValue Streams

A Value StreamA Value Stream is the set of all actions is the set of all actions (both (both

value added and non-value added)value added and non-value added) required to required to bring a specific product or service from raw bring a specific product or service from raw material through to the customer.material through to the customer.

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Value Stream MappingValue Stream Mapping

Takes time, but it’s worth the effortTakes time, but it’s worth the effort Helps avoid pet projectsHelps avoid pet projects Shows us most important business Shows us most important business needsneeds Requires continual updatingRequires continual updating Very visual Very visual Helps create curiosity and excitementHelps create curiosity and excitement Only as good as you expect them to beOnly as good as you expect them to be Value Stream Leaders are essentialValue Stream Leaders are essential This remains a giant pitfall for us!This remains a giant pitfall for us!

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Learning #9Learning #9

You can’t improve unless you can see You can’t improve unless you can see where you are!where you are!

Corrective Action:Corrective Action: Learn to See the Whole of your operationsLearn to See the Whole of your operations Invest in Value Stream MappingInvest in Value Stream Mapping Create one and use it to select projectsCreate one and use it to select projects Maintain it Maintain it (that’s the hardest part)(that’s the hardest part)

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Macro Value StreamMacro Value StreamGrass Roots for Green BeltsGrass Roots for Green Belts

Activity1

Activity2

Activity3

Activity4

Activity5

Metrics QualityTimeCost

QualityTimeCost

QualityTimeCost

QualityTimeCost

QualityTimeCost

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Leverage

36© Business Excellence

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Micro Level Value StreamMicro Level Value StreamSub

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Metrics QualityTimeCost

QualityTimeCost

QualityTimeCost

QualityTimeCost

QualityTimeCost

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5S & Standardized Work5S & Standardized Work

Two foundation piecesTwo foundation pieces

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5S5S

Instills SELF-DISCIPLINE (Instills SELF-DISCIPLINE (most important)most important)

Housekeeping & organization tooHousekeeping & organization too Without discipline, 5S becomes 4SWithout discipline, 5S becomes 4S We embarked on 6S Certification Nov 05We embarked on 6S Certification Nov 05

66thth S stands for Safety S stands for Safety

5S helps with “Standardized Work” which 5S helps with “Standardized Work” which is also essentialis also essential

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Standardized WorkStandardized Work

Natural outcome of Value Stream Mapping Natural outcome of Value Stream Mapping and 5S implementationand 5S implementation

We tried to standardize the work early onWe tried to standardize the work early on Standardized Muda filled processesStandardized Muda filled processes Without a disciplined workforceWithout a disciplined workforce We failed to improve for the most partWe failed to improve for the most part So we tried it again & and failed againSo we tried it again & and failed again

Definition of insanity comes to mindDefinition of insanity comes to mind

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Learning #10Learning #10

Meaningful and sustained improvement requires Meaningful and sustained improvement requires discipline (5S) and standardized work.discipline (5S) and standardized work.

Corrective Actions:Corrective Actions: Implement 5S (or 6S) & stick to it Implement 5S (or 6S) & stick to it Make it become part of your cultureMake it become part of your culture

(behavior->attitude-> culture) Institute standard work throughout the process, Institute standard work throughout the process,

enhanced by 5S & visual factory concepts enhanced by 5S & visual factory concepts

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Prerequisite for Success Prerequisite for Success

Select the right Lean Sigma Coach and work Select the right Lean Sigma Coach and work with him to develop the best implementation with him to develop the best implementation process for your situation. process for your situation.

Corrective Action:Corrective Action: Select a coach for the right reasonsSelect a coach for the right reasons Keep things “grass roots” so everyone can participateKeep things “grass roots” so everyone can participate Require customization vs. canned approachesRequire customization vs. canned approaches Open minded, flexible, seeks & responds to feedbackOpen minded, flexible, seeks & responds to feedback Makes your employees look like heroesMakes your employees look like heroes Expection: s/he works their way out of a job!Expection: s/he works their way out of a job!

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Why use a Lean Sigma Coach?Why use a Lean Sigma Coach?

““Third Party Advantage”Third Party Advantage” To ensure consistency in:To ensure consistency in:

training and project evaluationtraining and project evaluation Benchmarking – bring the best to usBenchmarking – bring the best to us Innovation – overcome HEB paradigmsInnovation – overcome HEB paradigms Providing resources during peak demandsProviding resources during peak demands Able to do projects as well as trainingAble to do projects as well as training Can work across all levels and departments Can work across all levels and departments

We have worked with our coach for 4+ yrsWe have worked with our coach for 4+ yrs Long term mutually beneficial partnership Long term mutually beneficial partnership

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Newest InitiativeNewest Initiative

Offering our training toOffering our training to Our suppliers and customers Our suppliers and customers And non-related industriesAnd non-related industries

Why?Why? Reduces our costsReduces our costs New ideas and perspectives New ideas and perspectives (no paradigms about (no paradigms about

our processes, especially from other industries)our processes, especially from other industries)

Provides our Coach with new contactsProvides our Coach with new contacts

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Recommended Reading ListRecommended Reading List The Machine that Change the World, The Story of The Machine that Change the World, The Story of

Lean Production, Womack, Jones and RoosLean Production, Womack, Jones and Roos Lean Thinking, Womack and Jones 2Lean Thinking, Womack and Jones 2ndnd ed. ed. Learning to See: Value Stream Mapping to Add Value Learning to See: Value Stream Mapping to Add Value

and Eliminate Muda, Rother and Shookand Eliminate Muda, Rother and Shook The Toyota Way, Jeffrey K. LikerThe Toyota Way, Jeffrey K. Liker The Toyota Way Fieldbook, Likker and MeierThe Toyota Way Fieldbook, Likker and Meier ““5S at Deceuninck North America’s Monroe Site: 5S at Deceuninck North America’s Monroe Site:

Sustaining and Improving the Gains”, Target, Volume Sustaining and Improving the Gains”, Target, Volume 21, Number 3. 21, Number 3.

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Thank you for this Thank you for this opportunity! opportunity! JonJon

What may I clarify for you?What may I clarify for you?