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ACHIEVING LEAN EXCELLENCE IN A NON-MANUFACTURING SUPPLY CHAIN ELM VALLE RESOURCES GLOBAL PROFESSIONALS March 2012
ACHIEVING LEAN EXCELLENCE IN A NON-MANUFACTURING SUPPLY CHAIN
ELM VALLE
RESOURCES GLOBAL PROFESSIONALS
March 2012
Agenda
Introductions
Six Sigma v. Lean
Industry Trend
Barriers
Why Supply Chain
Value Stream and Methodology
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WE ARE A PUBLICLY-TRADED, GLOBAL PROFESSIONAL SERVICES FIRM WITH A BIG FOUR HERITAGE.
Founded in 1996 as part of Deloitte.
Management buy-out (1999) and initial public offering (2000). NASDAQ: RECN.
Selectively acquired Big Four service lines in Europe and Asia/Pacific.
We partner with business leaders and their
teams to plan and execute initiatives as well as
support day to day operations. From more than
80 offices in North America, Europe and Asia
Pacific, Resources serves 1,900 clients in 66
countries. We're a pioneering professional
services firm, a global community with a new
approach to business - inside out.
About Resources Global
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Professional services provided to:
44 of the Fortune 50
86 of the Fortune 100
364 of the Fortune 500
615 of the Fortune 1000
35 of the Fortune Global 50
57 of the Fortune Global 100
222 of the Fortune Global 500
100%of the Fortune 500 Pharmaceuticals Companies
100%of the Fortune 500 Aerospace and Defense Companies
100% of the Fortune 100 Energy Companies
80%of the Fortune 500 Gas, Electric and Water Utilities
TOP 12 Fortune 500 Commercial Banks
OVER 80%
of the Fortune 500 Financial Services Companies
100% of the Fortune 500 Entertainment Companies
7 OF TOP 10
Fortune 500 Chemical Companies
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About Myself
Elm Valle
Six years U.S. Army Officer
Experienced Consultant with Resources Global and BIG 4 FIRMS
Global Supply Chain Experience with Retail, Oil & Gas, and Chemical
MBA, Lean Six Sigma Black Belt, Project Management Certified
Membership: Lean Enterprise Institute, APICS, The Hackett Group, The Aberdeen Group
15 Years of Operations Experience [Domestic and International]
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Difference Between Six Sigma and Lean
SIX SIGMA vs. LEAN
LEAN
Waste Reduction and seeing the whole.
300 miss-Deliveries per 300,000 letters
6 SIGMA
Variation Reduction and problem solving.
3.4 miss-deliveries per one million letters
Part of the same discipline.
Utility is dependent on the goal!
Where is each one used?
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How Many are LEAN Companies?
90% of Companies claim they are LEAN PractitionersOnly 20% have deployed LEAN past their manufacturing floors
Top Barriers for LEAN deployment
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All of these can be addressed. There really is no reason not be a LEAN Organization.
Why Supply Chain?
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“Supply chains are as old as commerce, but the opportunities they now present are without precedent. Modern manufacturing has driven so much time and cost out of the production process that there is only one place left to turn for competitive advantage. As business engineering guru Michael Hammer recently put it in his new book, The Agenda, the supply chain is the last untapped vein of business gold.”
– Supply Chains: A Manager’s Guide by David A. Taylor, Ph.D.
Pressures Driving Lean in Supply Chain
LEAN in NON-Manufacturing Supply Chain
Lean is applicable in all business environments, especially in Supply Chain
Not Manufacturing Specific – All Functions follow a process flow
Value Stream Mapping is a great way to begin the LEAN Journey for many companies
Identifies “waste” and reduces steps
Not an attempt to eliminate work force but redeploy them for Value Add Activities
Value Stream Mapping is a great way to begin the LEAN Journey for many beginning companies
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What is Value Stream?
Value - From the Perspective of the Customer
Flow - No Waiting. No Re-Work
Work – Standardize, Built-In Quality
Managing & Learning -Milestones & Check Points, Learning Embedded
LEAN Principle – Understand the customer needs and execute the entire value chain to serve the final customer.
The Formula for Success
Cross Functional Participation with Key Stakeholder
Remove jargon and confusing terminology
Target Pain points in Supply Chain
PO Processing Time and Cost
Logistical Bottlenecks
Supplier Performance
Inventory Levels to Business Needs
What are others?
Execute Low Hanging Fruit
Train the “EASY TOOLS” – 5 S, Spaghetti Diagrams, & VSM,
Methodology
Brand, Marketing, Champion, and Socialize Project Plan and Timeline Current State Mapping Determine Value Stream Identify the Wastes Map Future State Quick Wins & Low Hanging Fruit Measure, Control, Improve Incremental Progress Leadership Support and Buy In
How do I do a LEAN VSM Project?
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Mapping the Current State
The Do’s and Don’ts of Process Mapping.
Do’s DO map the process as it actually happens DO talk to the other people who are involved in the process DO define the beginning and end of the process before you start DO the process map at a high level. Keep it simple and illustrative DO work in a team. Seek advice
Do Not’s DON’T map the process as you think it happens or as you think it ought to happen. Do
not interpret DON’T restrict your process map to activities relating to the department that primarily
runs the process DON’T attempt to start process mapping before having identified the process’ beginning and end DON’T get bogged down with too much detail DON’T struggle on your own
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Determine Value Add Activities
Minimize
Non-Value Add
Re
qu
ired
Act
ivit
y
Eliminate
Improve
Monitor
Value Add
No
n-R
eq
uir
ed
A
ctiv
ity
AUTOMATE
Purchase Orders Rework
Enter Vendor
Invoicing
Inventory Transfers
Delivery of Product
Creating the Purchase Order
Order Fulfillment
From a Supply Chain perspective your customers are both internal and external.
Loading Trucks
Packing/Unpacking
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Future State Mapping
Eliminate Steps & handoffs Combine Steps Create parallel paths Alter sequencing Implement Pull Reduce / eliminate batches Improve quality Create organized workplace
Reduced change over Create standard work Eliminate unnecessary approvals Eliminate NVA Co-locate functions based on flow [cross functional teams] Improve Status Leverage Automation
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Example of VSM Wall Mapping
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Aberdeen Competitive Framework
Keys to Success
Develop the KPI & Metrics Framework
Instill the Culture
Follow Up On Action Items and Execute Low Hanging Fruit
Continuous LEAN events
Have others Grade you!
CONTACTS & REFERENCES
ELM VALLE
Consultant Supply Chain & Information Management
281.451.1806
RICK COCHRAN
Senior Client Services Director
713.403.1967
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REFERENCESThe Lean Supply Chain Report, The Aberdeen Group Value Stream Mapping for the Office and Services, Peter Walsh
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BACK UP: Muri and Mura
Muri is all the unreasonable work that management imposes on workers and machines because of poor organization, such as carrying heavy weights, moving things around, dangerous tasks, even working significantly faster than usual. It is pushing a person or a machine beyond its natural limits. This may simply be asking a greater level of performance from a process than it can handle without taking shortcuts and informally modifying decision criteria. Muri also includes bad working conditions, and it will often push a resource to work harder than its natural limits. Unreasonable work is almost always a cause of multiple variations. Lean focuses on the planning of processes to avoid muri and on the preparation and planning of the process, or what work can be avoided proactively by design.
Mura is the variation and inconsistency in quality and volume in both products and human conditions. Lean focuses on how the work design is implemented and the elimination of fluctuation at the scheduling or operations level, such as quality and volume.
