Lean Leadership - Part 3 of 3

© 2015 The Karen Martin Group, Inc. 1

Lean Management Components

Core Values / Principles / Philosophy

• Analytical tools• Value stream analysis & mapping• Metrics-based process mapping• Root cause analysis: Five Why’s, Fishbone,

Pareto, Problem tree, FMEA• Waste Countermeasures

• Standard work• Quality at the Source / Error proofing• 5S / Visuals• Pull systems: One-piece flow, FIFO lanes,

Kanban• Cells / co-location• Level loading• Work balancing• Batch size reduction• Setup & changeover reduction• Work segmentation• Autonomation• Cross-training / multi-functional workers

• Strategy deployment (hoshin planning)• Value stream management• Key performance indicators (three levels,

including customer & operational metrics)• Disciplined process management via clear

owners & KPIs• Daily kaizen• PDSA Problem Solving (& A3 management) • Performance dialogues / huddles / standups• Go & see (gemba) management• Humble inquiry• Continuously seeking voice of the customer• Purposeful meetings & reporting• Lean accounting• Consensus management

• Humility• Respect• Curiosity• Transparency• Relentless pursuit for

perfection

• Customer value • Flow / waste elimination• Just in time• Visual management• Work standardization

Lean Management


Lean Leadership Webinars – Parts 1 & 2www.ksmartin.com/webinars


• Analytical tools• Value stream mapping• Metrics-based process mapping• Root cause analysis: Five Why’s, Fishbone,








perfection


Lean Management


http://www.vimeo.com/174946588

Lean Management Components – Part 3


• Analytical tools• Value stream mapping• Metrics-based process mapping• Root cause analysis: Five Why’s, Fishbone,








perfection


Lean Management


www.ksmartin.com/webinars

5

You will learn…

• What’s a value stream?• What are the organizational benefits of looking at work

through the value stream lens?• What’s involved in a value stream transformation cycle?• What’s a value stream map?• Why is VSM a team-based, leadership-heavy activity?• How does one prepare for a mapping activity, create current

and future state maps, and develop a transformation plan?• Key success factors

Wherever there is a request and a deliverable,there is a value stream.

Value StreamAll of the activities required to transform acustomer request into a good or service.

8

First defined in The Machine That Changed the World, James Womack, Daniel Jones, & Daniel Roos, 1990.

Process ProcessProcess

CustomerRequest

CustomerReceipt

http://www.amazon.com/gp/product/0743299795/ref=as_li_ss_tl?ie=UTF8&camp=1789&creative=390957&creativeASIN=0743299795&linkCode=as2&tag=karmarass-20

1996

Value

Value stream

Flow

Pull

Perfection

Value Stream’s Roots

Value Stream Mapping Progression

10

Mike Rother &John Shook

1999

Beau Keyte &Drew Locher, 2004 & 2015

Karen Martin &Mike Osterling

2014

“Whenever there is a product for a customer, there is a value stream.

The challenge lies in seeing it.”

Work: Degrees of Granularity

11

Value Stream

Process Process Process

Step StepStep

Macro Perspective

• Define strategic direction (“what”)

• Heavy leadership involvement

• Value Stream Mapping

Micro Perspective

• Identify the tactical “how”

• Heavy frontline involvement

• Metrics-Based Process Mapping

Work: Levels of Granularity

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Begin Discussions with Prospective

Client

Negotiate & Execute Contract

Communicate Plan Options &

Enrollment Process

Enroll Employees

Service the Contract

Value Stream

Process Negotiate pricing Approve Negotiate

terms Approve Execute Contract

CUSTOMER

Function FunctionFunctionFunction

Core Value Stream

Support Value Stream

Support Value Stream

Silo-Centric vs. Value Stream Thinking

Value stream

segment

Value stream

segment

One Value Stream Map for Each Product FamilyFunction A Function B Function C Function D Function E Function F Function B Function H

X X X X X

X X X X X

X X X X X X X X

X X X X X

X X X X X

X X X X X X X X

X X X X

X X X X X X X

X X X X X

Value Stream Map #1

Value Stream Scoping Diagram: Defining Specific Conditions

Golden State Equipment, Inc.

Capital Equipment

80% $; 10% vol.

Catalog 40%

Configure to order

15%

Engineer to order

35%

Custom hardware

20%

Custom software

20%

Both 60%

New Product Development

10%

Spares & subassemblies

20% $; 90% vol.

Catalog

Engineer to order

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Value Stream Mapping Benefit:Seeing the Whole

16

Value Stream Mapping enables a mapping team to get ABOVE the work

17

18

Strategy BeforeTactics

Options:• I-55/57 & I- 30• I-70 & I-44• I-69 & I-30

20

VSM Promotes System Thinking

21

System Efficiency = Optimal Value Stream Performance

Departmental Efficiency ≠ System Optimization

22© 2016 The

Visualize Information Management Problems

23

24

Visualize the entire cycle of value delivery on a single sheet of paper

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Value Stream Mapping Facilitates Leadership

Consensus & Accelerates Improvement

Sample Future State Decisions

• Replace sales commissions with annual profit sharing.• Insource an outsourced activity.• Restructure broker relationships.• Merge two departments.• Shift work from one department to another.• Push authorizations down two levels.• Eliminate a department (with staff redeployment to other areas).• Build the means for customers to order online.• Add value stream owners to org chart.• Double the financial levels of authority.

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Improvement RolesWho? Accountability Practice / Tool

Sr. Leaders What has to happen Hoshin Planning, Value Stream Mapping

Frontlines How it will happen” Projects, Kaizen Events, Just-do-its, Daily Kaizen

Stra

tegi

cTa

ctic

al

Middle Management

Value Stream Improvement

Annual Goals & Priorities (Strategy Deployment) or

High-level A3

Projects (w/ or w/o A3), Rapid Improvement Events

(Kaizen Events), Daily Kaizen (Kata)

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1Information

Flow

2Work Flow

3Timeline

Basic Current State Value Stream Map

Lead Time vs. Process Time

Lead Time (LT)

Work Received

Work passed to next process or

department

Process Time (PT)

Lead Time = Elapsed time; Throughput time; turnaround timeProcess Time = Touch time; work time; cycle time

Work is Idle Work is Idle

Measuring In-Process Quality: Percent Complete & Accurate (%C&A)

Customer

Process 1

Process 2

Process 3

Process 4

80% 50%95%

75%

90%

%C&A = % of incoming work that’s “usable as is”; no need for rework:• Correcting information or material that was supplied• Adding information that should have been supplied• Clarifying information that should have or could have been clearer

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Customer

1

Process 3

Function E

LT = 0.5 daysPT = 30 mins.%C&A = 95%

4

4

10 mins.1 days

120 mins.2 days

30 mins.0.5 days Total LT = 3.5 days

Total PT = 160 mins.Activity Ratio = 9.5%Rolled %C&A = 89.3%

Process 2

Function C

LT = 2 daysPT = 120 mins.%C&A = 95%

3

3

IT-1 IT-2

5 items

Process 1

Function A

LT = 1 daysPT = 10 mins.%C&A = 99%

5

2

1 items 10 items

Standard work

Modified approvals

IT interface

Cross-train

Cross-train

Standard workError

proof

Basic Value Stream Map: Future State

Value Stream PerformanceSample Results

Metric Current State ProjectedFuture State

Projected% Improvement

Lead Time(PO to shipping)

17 months 7.5 months 56%

Process Time 600 hours 450 hours 25% (22 FTEs)

Rolled % Complete & Accurate 0% 21% > 2,000%

On-time delivery 13% 90% 592%

# Internally-produced Change Orders 25/project 12/project 52%

Freed Cash flow $25M per year

Prepare Understand Current State

DesignFuture State

Develop Transformation

Plan

Execute Transformation

Plan

3-4 consecutive days of Accelerated Learning & Design (ALD)

4-8 weeks prior to ALD

sessions

3-9 months following ALD

sessions

Repeat

Value Stream Transformation Cycle

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• Charter development• Team formation• Data collection &

review• Team prep

12 13 24 35 4

51 62 73 84 95 10

12 13 24 35 4

1234 Date: Date:engagement, financials, lead time, safety records, etc.

effectiveness, market trends, customer satisfaction, employee Signature:Date:

Relevant Data Agreement

Examples: work volume & volume variation, process quality & Executive SponsorWhat data is required to understand relevant current state isues.

Signature: Signature:

How will the business, internal and external customers, and Functioninternal and external suppliers benefit from value stream improvement? SMEs that may not be needed full time

Always a nice touch; keeps the team from wandering

On-site, ample wall space, quiet/private location

Benefits to Customers & Business On-Call Support

Increase <defined metric> from X to Y (Z% improvement).Reduce <defined metric> from X to Y (Z% improvement).

Measurable Target Condition

What's driving the need for improvement? FunctionLeadership-heavy

Current State Problems & Business Needs Mapping Team

Boundaries & Limitations

Improvement Time Frame

What is the team NOT authorized to change?

Typically 3-6 months

Last Step Task on last process blockLogistics

Coordinator Not always needed

Aids in consensus building and organizational learning. Typically the last hour of the day.

First Step Task on first process block

Briefing Dates &

Times

Meals Provided

Briefing Attendees

** required *optional

List the the people that are required to attend the briefings (**) and those whose attendance is optional (*).

Demand RateTrigger

How many times is this done per wk, qtr, mo, or yr?

What initiates the process?

Value Stream Mapping CharterScope Accountable Parties Logistics

Required: typically VP or C-level

If needed—often director or manager level

Specific Conditions

What circumstances are included and excluded? (e.g., type of customer, geographic location, etc.)

Value Stream Champion

Value stream being improvedExecutive

SponsorValue StreamEvent Dates

& Times

3 days typically; consecutive is best; 6 hrs per day minimum; 7 or 8 hrs is best

Required: skilled, objective person leading the activity

Base-camp LocationFacilitator

Name

Name

FacilitatorValue Stream Champion

Contact Information

Contact Information

Charter: Critical planning, communication, and consensus-building tool

Available at www.ksmartin.com/vsm-charter

http://www.ksmartin.com/vsm-charter

What problem are you trying to solve?

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Desired State (or known standard)

Current State

Gap = Problem

Agency

1.3 hrs. 5.0 hrs.

10.0 days

3.0 hrs.

5.0 days

0.2 hrs.

1.0 days

1.0 hrs.

3.0 days

5.0 hrs.

2.0 days

1.3 hrs.

1.5 days

8.0 hrs. 4.0 hrs.

10.0 days

0.1 hrs.

10.0 days

40.0 hrs.

10.0 days

4.0 hrs.

7.0 days

3.0 hrs.

64.0 days Total LT = 124.7 days

Total PT = 75.8 hrs.Activity Ratio = 8%

Customer's Order

System

Apptus/ Design

C9

Apollo

Create Opportunity

Conduct Credit Check

SalesCredit

LT = 0 daysPT = 1.25 hrs.%C&A: 60%

1Create & Send

ProposalValidate

Opportunity create IO

SalesStrategic

Response

LT = 2 weeksPT = 5 hrs.%C&A: 80%

2Rev iew & Negotiate Deal Via

Unsigned IO

SalesDeal Desk


4

3Sign & return

IO

Customer

LT = 1 daysPT = 0.25 hrs.%C&A: 100%

4Confirm

Campaign Details

Direct Teams to setup

campaign, obtain assetsAcct Mgmt

LT = 3 daysPT = 1 hours%C&A: 52%

5Setup & Launch

Campaign

Ad OperationsAnalytics

LT = 2 daysPT = 5 hrs.%C&A: 50%

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6Obtain

Ext. Data & Config. Auto

Load (AO)

Acct MgmtAd

Operations

LT = 1.5 daysPT = 1.25 hrs.%C&A: 80%

7

Rolled %C&A = 1.9%

Monitor Campaign &

Trouble Shoot

OperationsAcct MgmtAnalytics


8

Inv oice Customer

(Batch = 1x/ mnth)

Finance


13

9Send

Commission Report To

Comp

(Batch = 1x/mnth)Finance

LT = 2 weeksPT = 0.1 hrs.%C&A: 99%

10Assign

Campaign To Reps

(Batch = 45 Days)Comp

LT = 10 daysPT = 40 hrs.%C&A: 95%

11

Pay Commission

FinancePayroll


12

Notify Client They Are Liv e &Send SS's

Acct MgmtAd

Operations


7B

Receiv e Cash(inv oice payment)

90 Calendar days = 64

working days

LT = 64 daysPT = 3 hrs.%C&A: 100%

6

13

Marketing CampaignCurrent State Value Stream Map

1,000 Campaigns per Month

Rev iew & sign IO

FinanceLegal

AnalyticsProduct


3BUp Sell & Ask

For Incr. Rev enue

Acct MgmtSales

LT = 0 daysPT = 1 hrs.

8BSend Wrap-Up

Reports & Cond. QBR's

Acct MgmtSales

Analytics

LT = 0 daysPT = 2 hrs.

9B

Rate Card

KanterData.com

Credit SafeForsev a

DNB

Sales Force

JIRA Fuel/ DSP

Admin

Excel/ Google Sheets

NetSuiteCustomer's

Billing System

ADPXactlyX1

Agency'sCustomer

Go to the Gemba to learn how

work REALLYgets done

Go & SeeAsk Why

Show Respect

Daily Leadership Briefings

Day 1 – Share insights; reduce resistanceDay 2 – Build consensus re: future stateDay 3 – Gain commitment for action plan

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Agency

0.5 hrs. 2.5 hrs.10.0 days

2.0 hrs.5.0 days

0.2 hrs.1.0 days

0.5 hrs.3.0 days

2.0 hrs.0.4 days

1.3 hrs.1.5 days

6.5 hrs. 0.2 hrs.4.0 days

0.1 hrs.5.0 days

16.0 hrs.5.0 days

4.0 hrs.7.0 days

2.0 hrs.53.0 days Total LT = 95.8 days

Total PT = 37.8 hrs.Activity Ratio = 5%

Customer Order

Systems

Apptus/ DocuSign

C9

Create Opportunity

Conduct Credit Check

SalesCredit

LT = 0 daysPT = 0.5 hrs.%C&A: 90%

1Create & Send

ProposalValidate

Opportunity Create IO

SalesAcct MgmtStrategic Response

LT = 2 weeksPT = 2.5 hrs.%C&A: 90%

2

Rev iew & Negotiate Deal Via

Unsigned IO

SalesDeal Desk


3

Sign & return IO

Close IO in SFDC

CustomerSales

LT = 1 daysPT = 15 mins.%C&A: 100%

4Confirm

Campaign DetailsObtain

Creativ e Assets

Acct Mgmt


5

Setup & Launch

Campaign

Ad OperationsAnalytics

LT = 3 hoursPT = 2 hrs.%C&A: 70%

6

Obtain Ext. Data & Config. Auto

Load (AO)

Acct MgmtAd

Operations

LT = 1.5 daysPT = 1.25 hours%C&A: 95%

7

Rolled %C&A = 27%

Monitor & Trouble Shoot

Campaign

OperationsAcct MgmtAnalytics

LT = 0 daysPT = 6.5 hrs.%C&A: 80%

8

Send Commission

Report To Comp.

(Batch = Weekly)

Finance


10

Assign Campaign To

Reps

(Batch = Weekly)

Comp

LT = 5 daysPT = 2 days%C&A: 99%

11

Pay Commission

FinancePayroll


12

Notify Client They Are Liv e &Send Screen

Shots

AMAd

Operations


7B

Reciev e Cash(Inv oice

Payment)

75 Calendar days=53

working days

LT = 53 daysPT = 2 hrs.%C&A: 100%

13

Marketing CampaignFuture State Value Stream

2,000 Campaigns per Month

Up Sell & Ask For Incr. Rev enue

AMSales

PT = 0.5 hrs.

8B

Send Wrap-Up Reports &

Cond. QBR's

AMSales

Analytics

PT = 2 hours

9B

Gainsight

KantarData.com

CreditsafeForsev a

DNB

Sales Force

JIRAFuel/ DSP

Scale Tool

NetSuiteCustomer's

Billing System

ADPXactly

Agency'sCustomer

Inv oice Customer

(Batch = end of campaign

+ 4 days)

Finance

LT = 4 daysPT = 0.25 hrs.%C&A: 95%

2

9

Define, test and roll out AM role in proposal process

Migrate rate card to SFDC

Automate deal approval (w/

exception processing)

Automate IO load into SFDC

Implement BI

Create FYI email to client confirming campaign launch

Define opportunity and create standard wrok re: entry into SFDC (including timing)

Implement signed IO closed date + X days

Create master data

Evaluate keeping C9 vs. creating SFDC forecast

tool; implement decision

Eliminate JIRA

Improve tie-out

Launch campaigns within 1 hr of receiving signed IO

and creative

Improve quality of external

reports

Continue testing & evaluate Gainsight and finish roll

out if OK

Complete development

& roll out scale tool

Make insight generator

more robust

Create means for giving customers

greater insight

Get customer invoice requirements upfront

Automate external reports for invoicing

Consolidate to one vendor for credit

checks

Create executive

dashboard

Define forecasting data needs, methodology, timing

& system(s) of record

Design and implement lock box automation

Optimize for credit card payments

(where applicable)

Create weekly commissionable revenue report

Implement multi-seat support

Find means to eliminate Admin

& Apollo

Design & implement system integration

Define and gain consensus re:

"transparency" (geo specific)

Future State VSM:Your Blueprint

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J F M A M J J A S O N D

1 All existing customers with RFQ have access to form; %C&A of quotes = 90% KE1 Sean

Michaels X X 0%

2 Reduce PT @ review step and ensure RFQ omissions are detected at this step KE1 Sean

Michaels X X 50%

3 All estimates created using template; reduce estimate PT to 1.5 hours KE2 Dave

Gerald X X 75%3,4 Central repository for estimate history Proj Diana

MarieX 100%

6 Eliminate manual emails between sales and estimating Proj Diana

Marie X 100%

8 Fewer bugs passed on to production KE3 Ryan Austin X 50%

8Designated resources for ETO SW develop - shorter LT & improved leveraging of experience

Proj Michael O'Shea X X 0%

8,9Less guessing re: customer requirement; fewer assumptions and bad design passed to production

JDI DianaMarie X 100%

8,9Eliminate need for CS to compile specification package for eng, SW & production

Proj Diana Marie X X X 10%

7 Eliminate need to maintain BOMs in BlueStreak; eliminate licencing cost Proj Dave

Gerald X X 50%

7 Free up time in Sales group (only contacted if significant variance) JDI Danny

Tran X 100%

10 Customer service able to review PO and create SO KE4 Danny

Tran X X 100%

Value Stream Transformation PlanValue Stream Golden State Equipment, Inc. Scheduled Review Dates

Executive Sponsor Allen Ward 9-Aug-13 18-Oct-13Value Stream Champion Nancy Little 23-Aug-13 8-Nov-13

Value Stream Mapping Facilitator Dave Parks 9-Sep-13 26-Nov-13

Activate auto-notification in SalesForce (work flow)

Date Created 7/26/2013 30-Sep-13 19-Dec-13FS VSMBlock # Goal or Measurable Target Proposed Countermeasure Exec.

Method* Owner Planned Timeline for Execution Status

Standard RFQ form/checklist developed and made available to customers

Standard review criteria developed for sales to check incoming RFQs

Update existing estimating template

Link Excel and Salesforce

Improved software testing routines

Designated SW development team for ETO product

Give Eng design and SW Dev open access to sales and specification documents from quoting process

Link data files in SalesForce to SO and WO in SAP

Activate BOM costing in SAP

Customer service reviews and approves PO (compares to quote)

Standard work defined for PO review

Managing the Value Stream

• Key Performance Indicators2-5 relevant value stream KPIs (need process level KPIs as well) Operations heavySet targets and visual management boards; track

• OwnershipDesignated person – Value Steam OwnerMonitors KPIs and communicates performance to planDrives problem solving and ongoing improvements; ensures alignment with strategy

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Monitoring Value Stream & Process Performance

Value Stream Value Stream Owner Process Process Owner

Outpatient Imaging Sally V Scheduling & Registration Bill G

Exam & Clinical Reporting Jose C

Reports to physician Maria J

Inpatient surgery Tonianne S Admission Tom M

Clinical stay Kathleen T

Discharge Mike M

Billing Sylvia S

Revenue Cycle Management Bruce T N/A N/A

Value Stream & Process OwnershipABC Medical Center

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Value Stream Ownership

44

45

And Repeat…

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It’s not about the map.

It’s about the conversations, the insights, the decisions, the organizational healing

that mapping enables.


To Learn More…

• Books• Value Stream Mapping (Martin & Osterling)• The Complete Lean Enterprise (Keyte & Locher)• Learning to See (Rother & Shook)

• Public Workshops & Conferences• Association for Manufacturing Excellence• Lean Enterprise Institute• Shingo Institute

• Webinars – www.ksmartin.com/webinars

http://www.ksmartin.com/webinars

Questions or comments?

48

[email protected]

49

www.ksmartin.com/subscribe

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Date post:	12-Jan-2017
Category:	Business
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