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Lean Management feat. Oasis Simulation
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 3
how to measure/report your performance ? as a taxi driver/company …
(5 minutes)
what do you measure ?
how do you measure it ?
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 4
shortest
route
fastest
route
save petrol
short
waiting
times Safe / courteous
driving
clean
interior
nicest
route friendly
conversation
Meeting & exceeding Meeting & exceeding
expectationsexpectations
ImageImage Process Process
PerformancePerformance
Cost Cost
SavingSaving
number of
fares
total
revenue
IncomeIncome
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 5
• Aims are:
– Generating Income
– Eliminate waste (of resources)
– Improving Business Performance
– Building Brand Image
– Meeting & Exceeding Customer Expectations
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 6
• How to measure:
– Save petrol
– Shortest route
– Fastest route
– Clean interior
– Pleasant conversation
– Nicest route
– Shortest waiting times
– Safe/courteous driving
… liter/km
… km/fare
… km/hr
… checks/day
… minutes talked
… sights/trip
… minutes/fare
… accidents/week
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 7
FHRLAP_SPM_v3.0
Lean Management
09:00 introductions
09:30 traditional performance management – OASIS simulation
10:45 BREAK
11:00 failure of traditional performance measures
11:30 the strategic imperative
12:30 LUNCH
13:30 towards Operational Excellence with Lean Management
16:30 Lean Management in 5 steps
17:30 END
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 8
Lean Management
09:00 recapitulation day 1
09:15 towards a mindset for Operational Excellence
dilemma
10:30 BREAK
10:45 towards a mindset for Operational Excellence
team models, tower build
12:30 LUNCH
13:30 towards a mindset for Operational Excellence
Safety Boat, Frame Build
15:45 BREAK
16:00 application to your own environment
17:30 END
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 9
Balanced Scorecard
Vision
&
Strategy
Process View
build on internal strengths
continuously improve
Customer View
satisfy & retain customers
Finance View
provide shareholder returns
Innovation View
promote org’l learning,
growth & development
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 10
lagging
leading
Balanced Scorecard
financial
customer process
(business)
innovation & growth (people)
development
YESTERDAY
TODAY
TOMORROW
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 11
FHRLAP_SPM_v3.0
Balanced Scorecard
• Focus too much on financial performance
(=lagging effects)
• More focus needed on achieving strategic
objectives (= vision of future)
• Link needed between strategy & performance
system (=alignment)
• conclusion:
Need to envision “the future” not “the past”
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 12
FHRLAP_SPM_v3.0
• Performance Management needs to balance Financial, Customer, Process and Growth/Development indicators, (the 4 or 5 perspectives)
or measures of past, present and future
• ... but also indicators of effort and result.
Key Key LessonLesson
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 13
Critical Success Factors (CSF)
What you must unquestionably do (i.e. effort)
ór realise (i.e. output) to achieve a strategic
objective
critical effort
inputs
critical
outputs
effort outputs
strategic
objective
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 14
Key Performance Indicators (KPI)
Quantifying critical efforts and outputs: example
train employees
budgets
competent staff
best-in-class service delivery
# training hours
% completion
of PDP's
# qualified staff
% match between
job content and
competences
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 15
FHRLAP_SPM_v3.0
Balanced Scorecard
Objective of BSC implementation should be that
• every employee (at every level) …
– understands the relevant parts of the strategy
– has his/her own activities in line with the
organisation’s objectives
– spends more time on business-critical activities
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 16
FHRLAP_SPM_v3.0
Balanced Scorecard
Objective of BSC implementation should be that
• the whole organisation …
– has scorecards from top to team to individual
– has a systematic performance management review
policy that supports the generation of action plans at
all levels
– is able to instantly communicate change
– can rapidly amend strategies
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 17
FHRLAP_SPM_v3.0
Benefits of BSC
• Target-setting is done from every perspective
– Balanced follow-up on performance
– Enables fast reaction to changes
• Identifies business drivers
– Moves the focus from only financial figures to those
figures that impact organizational performance
– Management focus is transferred from reactive
management to proactive management
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 21
Customer Value Proposition
"best product"
product leadership
operational excellence "best quality/price"
customer intimacy "best total solution"
based on Treacy M, Wiersema F (1992) "Customer Intimacy and Other Value Disciplines", HBR
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 22
Customer Value Proposition: Operational Excellence
• A combination of quality, price, and ease of acquisition second to none
• Few if any product/service innovations; do not cultivate one-on-one customer relations
• Aim for standard execution/delivery in high volumes
• Examples …
Dell Computers – EasyJet – McDonald – Hertz – Toyota
based on Treacy M, Wiersema F (1992) "Customer Intimacy and Other Value Disciplines", HBR
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 23
Customer Value Proposition: Customer Intimacy
• Does not supply what ‘the market' wants, but what specific customers want
• Base their business on a thorough understanding of their customers and what they need
• Deliver products/services made to measure, at reasonable prices
• Examples …
McKinsey – Amazon
based on Treacy M, Wiersema F (1992) "Customer Intimacy and Other Value Disciplines", HBR
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 24
Customer Value Proposition: Product Leadership
• Continuously strive to deliver innovative products or find new applications for existing products and services
• Always seek to discover new avenues
• Bring creative, new ideas fast to market
• Examples …
Nike – Swatch – Sony – Apple Computers
based on Treacy M, Wiersema F (1992) "Customer Intimacy and Other Value Disciplines", HBR
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 25
Customer Value Proposition
Operational Excellence • Reliable products/services at competitive prices,
made available with minimal cost and efforts
• “The best quality/price"
Customer Intimacy • Best total solution, adapted to customer needs
• Not just a product/service but an “experience"
Product Leadership • “The best products"
• Products that continually supersede de "state-of-the-art"
based on Treacy M, Wiersema F (1992) "Customer Intimacy and Other Value Disciplines", HBR
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 26
Discussion
• Which Strategic Value Proposition
do you offer?
• What does that imply for
– the way you are organised / structured ?
– your management systems ?
– your organisational culture ?
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 27
leadership vs threshold
product differentiation
operational competence customer responsiveness
"best product"
product leadership
operational excellence "best total cost"
customer intimacy "best total solution"
based on Treacy M, Wiersema F (1992) "Customer Intimacy and Other Value Disciplines", HBR
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 28
FHRLAP_SPM_v3.0
• All companies and organisations must deliver a minimum level of operational excellence, AND customer intimacy AND product leadership.
• These thresholds may be called
– Operational competence
– Customer responsiveness
– Product differentiation
Key Key LessonLesson
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 29
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Lunch Break
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 30
Why are you here?
• Lean Management concepts starting
to be noticed & applied outside production
environments
• First introduction to
Lean Principles & Practices
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 31
What is Lean?
• Toyota Production System (TPS)
– Revolutionised manufacturing
(Ford vs Toyota)
– Now applied to different areas
• Google, Dell, Zara, Nike, ...
• Product Development
• Supply Chain Management
• Software Development
• Healthcare
• Hospitality
• ...
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 32
What we want to show
• Push and Pull Systems
• Kanban
• Systems Thinking
• Flow
• Heijunka
• Yatai (work cell)
and much more ...
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 33
Lean LegoTM Game
• Simulating a production line
Credits: Danilo Sato & Francisco Trindade
Hands-on
Results
Debriefing
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 34
Hands On – 1st Step
• Let’s simulate a production line ...
Task 1 Task 2 Task 3 Task 4 Task 5
• 4 teams
• 4 rounds of 40 seconds
• Follow the instructions
• Build ‘houses’
• 1 piece = €1.00
• 1 house = €25.00
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 35
Stay Motivated !
DO IT
RIGHT
FIRST
TIME
QUALITY
WORKER
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 36
What went wrong ?
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 37
Muda (Waste)
• Visible inventory
• Over/under production
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 39
Push vs Pull Systems
• Push System: upstream information
Expected
Demand
Mass
Production
Economies
of Scale
“you can have any colour you like, as long as it’s black ...”
(Henry Ford)
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 40
Push vs Pull Systems
“All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash.” “And we are reducing the time line by reducing the non-value adding wastes.”
Taiichi Ohno, The Toyota Production System: Beyond Large-Scale Production, Productivity Press, 1988
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 41
Push vs Pull Systems
• Push System: upstream information
Expected
Demand
Mass
Production
Economies
of Scale
• Pull System: downstream information
Customer Requirements
On Demand
Production Adaptation
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 42
Kanban
• Physical device, that ...
• ... signals demand to downstream processes
• ... regulates demand on a pull system
• ... limits Work in Process (WIP)
• ... aids visual control
• ... is self-directing
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 43
Kanban
Process A Process B
Buffer
IDLE FULL WORKING
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 44
Kanban
Process A Process B
Buffer
IDLE WORKING
Kanban
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 45
Kanban
Process A Process B
Buffer
WORKING WORKING
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 46
Kanban
Process A Process B
Buffer
IDLE FULL WORKING
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 47
Hands On – 2nd Step • Using Pull and Kanban
– Set up minimum buffers at intermediate steps
– Demand comes first
– Items are produced to fill gaps in buffers
Task 1 Task 2 Task 3 Task 4 Task 5
• 4 rounds of 40 seconds
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 48
Stay Motivated !
DO IT
RIGHT
FIRST
TIME
QUALITY
WORKER
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 49
What went wrong ?
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 50
Unleveled Process
• Another type of waste
• Some people working more than others
• Mura (unevenness: stop/start or slow/fast )
Heijunka (production levelling / smoothing)
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 51
Flow
• Ultimate goal is a leveled process
• Production line must be a continuous flow
• One piece is bought when one piece is delivered
• Sustainable pace
Minimise fluctuations by reducing production
batch size
Minimise change-over times (set-up times)
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 52
Systems Thinking
• Why does it still feel wrong?
• What are the other teams doing?
• What is the purpose of the system?
“a bad system will beat a good person every time...”
(W. Edwards Deming)
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 53
Let’s experiment
• Do we need 4 teams to build a house?
• Teams 1 and 2 have overlapping tasks!
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 54
Yatai (work cell)
• Multi-skilled worker
• Single piece flow
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 55
Hands On – 3rd Step
• Using Work Cells
– Each person builds a house
– Round of 160 seconds
– Signal (raise your hand) when you finish your house
Build house Sell house
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 56
Stay Motivated !
DO IT
RIGHT
FIRST
TIME
QUALITY
WORKER
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 57
What went wrong ?
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 58
Kaizen
• Continuous improvement
• Reflect and adapt
• Learn by standardising
• Long term thinking
• Respect people
Plan Do
Act Check
“Toyota’s real advantage was its ability to harness the intellect of ‘ordinary’ employees”
(Gary Hamel)
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 59
Improving the Process
It’s your turn
to help us
improve the process
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 60
Hands On – 4th Step
• Discuss your own work process • 1 round for each team
Team A Team B
Team C Team D
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 61
Stay Motivated !
DO IT
RIGHT
FIRST
TIME
QUALITY
WORKER
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 62
Results
Push System
Kanban – Pull System
Yatai
Team’s Process
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 63
Is that all ?
• We saw some of the practices
• Practices are contextual
• Underlying principles must be
understood
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 64
What is LEAN ?
Myth what TPS is NOT
Reality what TPS IS
A tangible recipe for success A consistent way of thinking
A management program or project A total management philosophy
A set of tools for implementation Focus on total customer satisfaction
A system for production only An environment of teamwork and
improvement
Implementable in a short- or mid-
term
A never-ending search for a better
way
Quality built in process
Evolutionary
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 65
Principles of Lean
• Specify what is of VALUE to the customer
• Identify the VALUE STREAM
• Create FLOW
• PULL demand
• Aim for PERFECTION: continuous
improvement
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 66
Types of Waste
• Muda – poor process (waste, rework)
• Mura – inconsistency / unevenness
• Muri – unreasonable / burden
(working beyond capacity)
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 68
7 wastes of Manufacturing
Image source: http://upload.wikimedia.org/wikipedia/en/5/5e/The_8_Wastes_-_DOWNTIME.jpg
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 69
5s : workplace organisation
• Sort (Seiri – organise)
• Straighten (Seiton – orderliness)
• Shine (Seiso – neat, clean)
• Standardise (Seiketsu – immaculate)
• Sustain (Shitsuke – discipline)
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 70
Image source: http://beyondlean.wordpress.com/2011/09/07/keys-to-sustaining-5s/
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 71
Image source: http://reliabilityweb.com/index.php/articles/the_5s_method_of_improvement_-
_enhancing_safety_productivity_and_culture/
Image source: http://solutions.wolterskluwer.com/blog/2011/03/yes-to-5s-anywhere-anytime//
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 72
Image source:http://info.marshallinstitute.com/?month=4&year=2011
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© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 73
Image source: http://reliabilityweb.com/index.php/articles/the_5s_method_of_improvement_-
_enhancing_safety_productivity_and_culture/
© Philippe Leliaert (SyntaxisNetworking) 2003-2013
Slide 74
Poka Yoke
• Poka = unintended error
• Yoke = to avoid
Image source: http://www.wisegeek.com/what-is-a-sim-card.htm