Lean Overview. Larry Cote President, Lean Advisors, Inc. Presented by: Copyright 2014 Lean Advisors, Inc.

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1 Lean Overview Presented by: Larry Cote President, Lean Advisors, Inc. Copyright 2014 Lean Advisors, Inc.

2 Lean Overview Agenda Overview of Lean Lean Methodology/Approach Challenges of Lean Red Flags of Lean Discussion

3 What is Lean? Lean is a simple strategy that focuses on the elimination of waste, variation, and work imbalance. Each step must create Value for the Customer /Client!

4 What is Lean? A thinking that aligns the entire organization, the people & processes to provide a) optimum service delivery, b) at highest quality c) with the lowest cost! Lean is a client focused approach to evaluate the entire end-to-end system delivery.

5 What is Lean? - Fundamentally Different Insight #1 See from Customer perspective Insight #2 See from part / product or service perspective Insight #3 See from an end-to-end perspective

6 What is Lean? Confusion - The term Lean is most often misused or misunderstood majority use it to describe any type of business process improvement. Reality It is a unique way of thinking. When implemented properly, Lean thinking will work for any process or organization that is looking to do more with what they have, and add value by improving quality, speed of delivery and reducing cost.

7 LEAN Environmental Scan TRANSFORMATION Stakeholders Lean Management Change Model STRATEGIC PLAN & LEAN FOUNDATIONS (HOSHIN) Lean Culture & Sustainability Theory, Methodology Tools, Techniques Embed Lean thinking into our day-to-day operations & strategic planning Identify Value Streams Value Stream Mapping Structured Change Plan Results, Ideas, Feedback Identify Internal Lean Champions Provide Lean Knowledge Transfer Promote Staff Engagement Knowledge Coaching Internal Champions Staff & Managers organized for success Implement & Standardize Recognize & Reward LEAN ENTERPRISE

8 Lean Change Model Current State Visual representation of the Current State ENTERPRISE VALUE STREAM MAPPING Future State Design a Lean Future State Current State Map Develop Implementation Plan Future State Map Implementation Plan Develop a focused plan to achieve the future state Identify Product Families Strategic Alignment

9 Lean Results Lead Time Cost Labor Required Space Inventory Defects Customer Responsiveness Capacity Employee Satisfaction Flexibility

10 Organizations Using Lean Manufacturing Hi Tech/Aerospace Educational Institutes Food and Beverage Pharma Financial Service Design/Architecture Building/Construction Healthcare Government at all levels

11 Typical Organizations Work can be categorized into 3 types of activities: Value Added Work Any activity transforming the part, product or service that a Client is willing to pay for. Waste Any activity that consumes time, space or resources but does not add Value to the product, service or other deliverable as viewed from the perspective of the external Client. Incidental Work Any activity that does not add Value but it is currently necessary. Incidental Work (Waste) Value Pure Waste

12 9 Types of Waste : Gov t/services Over Production People s Skills Inventory Reprioritiz ation 9 Wastes Waiting Poor Quality Defects Transporta tion Over- Processing Motion

13 9 Wastes in Gov t/services Motion Not having the right tools equipment and supplies required by staff to complete their exercises and tasks. Examples: an ill equipped admin office. Transportation Unnecessary movement of people, materials and equipment - located far from point of operation. Overprocessing Activities in delivery processes that do not add value from the client perspective. Unnecessary steps, too many approvals, lack of clarity for requirements, missing procedure requirement, redundant regulatory paper work, unnecessary reporting. Defects Errors on forms, giving out incorrect information etc., documents errors, data entry errors, variation of same task outcomes, and lost records.

14 9 Wastes in Gov t/services Overproduction Providing work, information, files, reports, products or services to the client or downstream process faster or sooner than required. This contributes to many of the other types of waste. Waiting Customers/clients waiting for products or services. When people, information, equipment or materials are not available when needed. Staff waiting for appointments, signatures, poorly scheduled meetings. Inventory More material at hand than necessary Overstocked outdated materials, poor understanding of supply and demand, obsolete equipment being stored, unread s, unfinished projects, files not needed Peoples Skills (unutilized resources) Staff not available to support coordinators because they are doing repetitive redundant administrative work Not maximizing talent - not engaging or involving staff institutions. Repriortization Unnecessary Unplanned disruptions that stops staff from doing what they are supposed to be doing.

15 Lean Principles - Solution/Methodology Lean will fundamentally change the way a business or organization operates! Value Value Stream Map Flow Pull Journey 1. Focus on creating Value from the perspective of the Client. 2. The best way to understand your business is to fully map the end-to-end processes. 3. Making Value Flow allows organizations to meet the needs of their clients and eliminate waste. 4. If you are unable to create Flow then introduce Pull 5. Finally, recognize that Lean is a way of being and as such it is a Journey and not a destination

16 Principle 1: Value What is Value? Value is simply defined as any work or activity that the Client would knowingly pay for.

17 Principle 2: VS Map/Analyze the Flow of Value Enterprise Value Stream Mapping (EVSM ) the fundamental Lean tool that provides a detailed understanding of the end-to-end process capturing both Value add and Non-Value add activities Information and Physical flows plus Timeline. Value Stream: set of all activities both value-add and non-value add required to bring product/service from Request of Service/Product to Delivery of that Service/Product

18 Enterprise Value Stream Map Current State VSM Patient Booking Perform Procedure Referring Doctor Clarification Fax Req Log Book Reading Rsults Referral Fax Results Clarification Clarification Clarification Call for appt time 4 Estimates 0.5 Hours I I I I I I I I Meeting 3 Hours Section Section Section Outbox Inbox Inbox Inbox Inbox Inbox Inbox File Prep Design Eng BOM Validation Quote Prep PT = 10 Min 1 Sales Rep 3 Files Finished 7 Files 3 Hours 2 Files 2 Days Duplication! data re-entry W W W W Clarify 2 Days PT = 5 Hrs 1 Engineer 7 Files 5 Hours 3 Files 2 Days Clarify 1 Day Meeting 1 Day Searching Waste 5S Needed PT = 3 Hrs 1 Purchase Analyst 0.07 Days 3 Hrs 3 Hrs 2 Days 2 Days 5 Hrs 2 Days 1 Day 1 Day 0.5 Days 1 Day 10 Min 5 Hrs 3 Hrs 2 Hrs Inbox ½ Day 4 Files 8 Hours PT = 2 Hrs 1 Sales Rep Total 11 Days Total 10 h 10 m Process: CT Scan Current State

19

20

21 EVSM Goal FS Implementation Plan EVSM provides implementation plan blueprint. Identifies - When specific tools are necessary - sequence Who should be involved Who will lead specific change Potential Impact Commitment - charter

22 Principle 3: Make Value Flow Batch Processing Each step completes a batch of second cycle time (Each coloured circle represents 1 minute of time) How long to complete a batch of 10 units?

23 Principle 3: Make Value Flow Continuous Flow Complete 1 Move 1 How long to complete the 10 units?

24 Principle 4: Pull from the Client Okay! One more please! Supplier Client(s)

25 Principle 5: Seek Perfection 1. There is always more waste 2. Involve employees in the process, training them as you proceed. 3. Use root cause analysis to solve problems promptly and permanently. 4. Make objectives visible.

26 Lean in Government/Services Major focus - Eliminating non-value in a complex administrative environment. Lean is not about eliminating people! Lean is about increasing staff value activities and decreasing their non-value becoming more client focused. Lean is about expanding organizational capacity by reducing costs and shortening service lead times. Lean is about understanding what is important to the client, delivering it at the right time in the right amount.

27 Typical Lean in Gov t Results % increase in capacity without adding resources or working harder 25-50% improvement in quality and customer satisfaction % improvement in financial performance Increased employee engagement Improved union-management relations Reduced firefighting more time and resources to devote to core business Less stress Pride of Ownership

28 Real Lean in Gov t Results House of Commons Louise McDonald Senior Quality Advisor Report to Canadians Some improvements - the number of activities decreased by 49%; the number of approvals was reduced by 31%; the lead time (including delays) dropped by 26%; and the cost fell by 5%.

29 Success Factors Challenges and Red Flags What have we learned over the 15 to 20 Years??

30 Success Factors Challenges Red Flags Measurement System Thinking not Projects Lean is a Cultural Transformation not a Tool Year has 12 Months not 5 ½ Management Capacity Leadership Expertise

31 Measurement 1) Silo Measures pit one department against the other over-the-wall thinking point improvement 2) Need all 3 Quality, Speed and Cost i.e. wait times 3) Client focused not individual or department 4) Reward/Motivation drive proper behaviour/thinking not just results 5) Benchmarking be very careful

32 Success Factors Challenges Red Flags Measurement System Thinking not Projects Lean is a Cultural Transformation not a Tool Year has 12 Months not 5 ½ Management Capacity Leadership Expertise

33 System vs Project/Point Point efficiency can be an individual process, or a department. MOVING FAST IS NOT THE SAME AS GOING SOMEWHERE Beware of exciting chaos!

34 Success System vs Point Not unusual! Most companies are organized in silos - by function and department. Value Stream flows cross organizational/silo boundaries. No one person is responsible for the entire flow i.e. multiple handoffs of both clients and information. Timeline (queue) starts when they first request the service. They don t look at each node separately. Point improvements cause Exciting Chaos.

35 Success Factors - Imperative Measurement System Thinking not Projects Lean is a Cultural Transformation not a Tool Year has 12 Months not 5 ½ Management Capacity Leadership Expertise

36 Lean - Not a Project/Tool Many organizations think they are implementing Lean when applying tools: Cells Pull Scheduling TPM 6 Sigma Process Mapping 5S or 6S QCO/SMED ISO ERP Kaizen Krazy Lean Sigma Kaizen Blitz Exciting Chaos

37 Success Factors Challenges Red Flags Measurement System Thinking not Projects Lean is a Cultural Transformation not a Tool Year has 12 Months not 5 ½ Management Capacity - Resources, Focused, Standard Work and Clear Vision/Priorities, Manageable Stress Leadership Expertise

38 Success Factors Challenges Red Flags January February March April May June July August September October November December

39 What Impedes Success No Time Legend : Red Not available Black Possibly Available January February March April May June July August September October November December Continuous Improvement???

40 Success Factors Challenges Red Flags Measurement System Thinking not Projects Lean is a Cultural Transformation not a Tool Year has 12 Months not 5 ½ Management Capacity Leadership Expertise

41 Management Capacity Recognize -all staff working at 100% -processes are broken not them heroes -new priorities constantly -much of what they have to do is non-value -may need to reduce non-value prior to getting involved in transformation

42 Success Factors Challenges Red Flags Measurement System Thinking not Projects Lean is a Cultural Transformation not a Tool Year has 12 Months not 5 ½ Management Capacity Leadership Expertise

43 Leadership The leader is the dynamic life-giving element in every organization. Peter Drucker Mandate hasn t changed Deliver exactly what your Customer/Client wants + when they want it + at the price and the expected quality they are willing to pay for it + be flexible to their ever-changing demands! + Continuously improve your business (service, product, innovation) every day.

44 Leadership Must. Have courage/passion Understand Lean is not a tool but way of thinking (cultural transformation) Find the right Knowledge - do not have to be Lean experts need to be able to ask the right questions and provide ongoing support Set clear and constant direction/vision Think Long-Term Execute the Plan stay with it constancy of purpose Apply proper measures to assess changes/progress plus reward behaviour not results Support Management team and staff training, apply Lean to free up Management/Staff Capacity Plus

45 Leadership - have Strategic/Hoshin Focus Avoid the exciting chaos syndrome. Achieving improvements in one area at the expense of another area isn t acceptable. Organizations deploy Value Stream Mapping to provide a documented plan for improvement within an end to end process. Some organizations deploy Hoshin Planning at Strategic level - documented plan to support Vision, Mission and achieve KPI s. Both VSM System thinking and Hoshin strategies must be linked to properly utilize resources and optimize results.

46 Success Factors Challenges Red Flags Measurement System Thinking not Projects Lean is a Cultural Transformation not a Tool Year has 12 Months not 5 ½ Management Capacity Leadership Expertise

47 Expertise be selective Knowledgeable highest quality Experts in the field ongoing learning adapt to any environment Years of practical experience preferable Able (and willing) to truly transfer the knowledge Goal minimize interruption to the organization (not max days) Creates Sustainable Transformation (not Fireman/Arsonist impact) Creates Real Change both Culturally and Technically (not quick hits and no cultural change)

48 Expertise caution Lists of Project no Current State analysis and Future State Plans/Vision with measureable impact on the system with focus on the patient & must include quality, cost and speed Matrix Project Selection hi/lo effort and hi/lo impact Process Maps not Value Stream Maps Bottlenecks or low-hanging fruit exciting chaos Experience in limited environments with Lean transformations Measures success with one or two of quality, speed and cost Solution- need more equipment, space or people Kaizen Offices, Project Mgt Office, Lean Certification BB,GB, YB, WB, MBB, Senseis Use of Tools Lean is cultural and technical sustainable results Plan should include several tools used properly/sequenced. Hi Effort Lo Impact Lo Effort Lo Impact Hi Effort Hi Impact Lo Effort Hi Impact

49 What Does It Take To Succeed

50 Summary What It Takes To Succeed Measurement proper drive the right behaviours System Thinking Not Projects (VS Mapping not Process Mapping) Lean is Not Tool Yearly Calendar - Make Time 12 months Not 5 ½ Increase Management Capacity Leadership lead with a vision, have passion, support, right knowledge Expertise find those with the right knowledge

51 Basic Requirement Passion/Courage Right Knowledge Execution of Plan Proper Plan Standardize Change Process

52 Lean Does Work! YES! Many ways to Implement Lean only a couple ways to do it right. The challenge is ensuring we select the right way.

53 Success If you think you can, or you think you can t. You are right. Henry Ford

54 THANK YOU!

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