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December 11, 2012 Art Byrne
The Value-Adding Lean CEO
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Housekeeping
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The Lean Turnaround by Art Byrne
Available at lean.org/bookstore
-
Learn from:
Art Byrne
John Shook
More Speakers, Learning Sessions,
and Companies to be Announced!
$350 Early Registration Discount, register today
Team Discount: Send 4 people and the 5th person is free!
Register at lean.org/Summit
in Orlando, FL
-
Todays Presenter Art Byrne
Implemented lean principles in 30+ companies
Began lean journey as a GM at GE
As group exec. - helped launch lean at Danaher
As Wiremold CEO - increased value by 2,500%
Wiremold documented in Lean Thinking by Womack & Jones
Now - Operating Partner, J.W. Childs Associates
.
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MY LEAN JOURNEY
Started in January 1982
Always from a CEO Position
Looked at It from a Business Perspective
A BUSINESS BOOK
. . . NOT A LEAN TOOLS BOOK
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A BUSINESS IS:
PEOPLE
PROCESSES
DELIVERING VALUE TO
CUSTOMERS BEST TEAM WINS
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TRADITIONAL APPROACH
Strategy Create Shareholder Value
Take Value-Adding Activities as a Given
Get Customers to Conform to You
Make the Month
LOOKING AT EVERYTHING BACKWARDS
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VALUE IS CREATED BY
Improving Your Value-Adding Activities
Delivering More Value to Your Customers Than Your Competitors Can
Conforming What You Do, to Your Customers Needs
THE OPPOSITE OF THE TRADITIONAL APPROACH
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PRODUCTIVITY = WEALTH
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PRODUCTIVITY = WEALTH
Lean Strategy = Big Improvements in Your Value-Adding Activities
This Creates Growth and Gains in Market Share
Lean is the Greatest Wealth Creator Ever
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BUT SOMEHOW WE TOOK:
Just-In-Time
and
Lean Thinking
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AND TURNED THEM INTO . . .
Just-In-Time Inventory
and
Lean Manufacturing
THIS IS A TRAGEDY
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THE RESULTS
Lean Focused on Manufacturing
Lean Is Just a Minor Part of Strategy
Lots of Companies Trying Not Many Are Successful
LEAN TURNAROUND SHOWS THE WAY
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LEAN TURNAROUND PREMISE:
If You Are Leading a Business and Dont Want to Dramatically
Improve Your Results
Then, You Are in the Wrong Job
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WHAT CAN YOU EXPECT?
Lead Times Cut from Weeks to Days
Inventory Turns Doubled in Two Years, Quadrupled in Four
Annual Productivity Gains of 15-20%
A 50% Reduction in Defects Per Year
A 50% Reduction in Space in Two Years
A 4-8% Improvement in Gross Margins
Working Capital as a Percent of Sales Cut in Half
Increased Growth by Taking Market Share
Creation of a Kaizen/Team Culture
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WIREMOLD RESULTS
Lead Times Dropped from 4-6 Weeks to 1-2 Days
Productivity Improved by 162%
Gross Profit Improved from 38% to 51% Plus 82%
Machine Changeovers Went from 3 per Week to 20-30 per Day
Inventory Turns Went from 3X to 18X
Customer Service Improved from 50% to 98%
Sales More than Quadrupled
EBITDA Grew from 6.2% to 20.8%
Working Capital/Sales Fell from 21.8% to 6.7%
Operating Income Improved by 13.4X
ENTERPRISE VALUE INCREASED BY 2,467%
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WHY ISNT EVERYONE DOING THIS?
Tell You
Show You
Bet You Cant
Yoshiki Iwata
EASY TO SAY, HARD TO DO
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A LEAN STRATEGY CAN TURNAROUND ANY BUSINESS
You Need a Proven Approach
Three Management Principles
Four Lean Fundamentals
LeadershipThe Key Ingredient
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THREE MANAGEMENT PRINCIPLES
Lean Is the Strategy
Lead from the Top
Transform the People
WITHOUT THESEYOU WILL FAIL
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LEAN IS THE STRATEGY
Focus On Process, Not Results
Better Value Adding = New Strategic Options
Lean Is a Time-Based Growth Strategy
IMPROVING YOUR VALUE ADDING ACTIVITIES IS
THE FOUNDATIONAL CORE OF YOUR STRATEGY
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LEAD FROM THE TOP
People Are Resistant to Change
Lead by Example
Commit to Becoming a Lean Expert
Learn by Doing
THE LEADER IS THE KEY
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TRANSFORM THE PEOPLE
The Only Asset That AppreciatesPeople
Respect Your PeopleBest Ideas
Create a Learning Environment
Invert the Organizational Pyramid
LEAN/CONTINUOUS IMPROVEMENT = CULTURE
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LEAN FUNDAMENTALS
Work to Takt Time
One-Piece Flow
Standard Work
Pull System
THE BUILDING BLOCKS OF YOUR TURNAROUND
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SOME UP FRONT WORK
Articulate Your Lean Vision
Obtain the Lean Knowledge
Kaizen Promotion Office
Lean Consultant
Add Some Lean Expertise to Your Board
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WIREMOLD STRATEGY
Be the leading supplier in the industries served and one of the top ten time-based competitors globally
1) CONSTANTLY STRENGTHEN OUR BASE OPERATIONS
100% On-Time Customer Service
50% Reduction in DefectsPer Year
20% Productivity GainEach Year
20X Inventory Turns
Visual Control and the 5Ss
2) DOUBLE IN SIZE EVERY THREE TO FIVE YEARS
Pursue Selective Acquisitions
Use QFD to Introduce New Products Every Month
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BOARD-DRIVEN KAIZEN RESULTS
AMERICAN SAFETY RAZOR
Item Result % Change Inventory Turns 2.5X to 6.2X + 148%
Working Cap./Sales 34% to 15% - 50%
Customer Service 85% to 98% + 15%
EBITDA Margin 17% to 23% + 35%
Cash Freed From W/C $65 Mil n.a.
Realized 3.5X Return On Investment
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GETTING STARTED
You Cant Drop Lean on a Traditional Organizational Structure
Everything Has to Change
Create a Value-Stream Organization Up Front
Consider a Reduction in Force Before You Begin
EVERYONE MUST BE ON BOARD
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FULL SPEED AHEAD
CEO Should Make the Announcement and Do the Initial Training
CEO Should Pick the Early Kaizen Events and Set the Stretch Goals
Kaizen Is Full-Time Job for the Week
Cut Set-Up Time
Free Up Space
Create Flow and Pull
INVENTORY IS THE ROOT OF ALL EVIL
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TYPICAL RESULTSONE WEEK KAIZEN
Cut Lead Times 90%
Reduce Staffing From 10 to 5
Reduce Inventory by 70%
Reduce Floor Space by 50%
Reduce Defects by 60%
Reduce Travel Distance by 90%
Reduce Set-Up Time by 90%
Connect the Customer to the Shop FloorPull System
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LEAN LEADERSHIP
Make the Case for ChangeUnfair Competitive Weapon
Get Everyone on Board or Let Them Go
Implement Policy Deployment
Establish Disciplined Daily Management at the Point of
Value-Adding
Take the Leaps of FaithOvercome the Lore
Push Through the Problems that Will Pop Up
Create Your Future Leaders
BE THE COMPANYS
LEAN ZEALOT
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DUMP THE STUFF THAT WILL HOLD YOU BACK
Standard Cost Accounting System
Traditional Measurements
Tickets, Tickets, Tickets
Big End-of-Month Financial Reviews
Major Capital Appropriation Request Processes
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LEAN APPLIES TO ANY BUSINESS
Lean Gains Are Bigger in Nonmanufacturing Companies But Harder to Get
Hospitals
Life Insurance
Distributors
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VIRGINIA MASON MEDICAL CENTER
Nurses spend 90% of Time w/ Patients vs. 35% Average Hospital
Time to Report Lab Tests Down 85%
Cost of Supplies Cut $1 Million per Year
Hospital Liability Costs Down 48.9%
Accounts Receivable Days >90 Days: Down 74%
Spine Clinic: Space Down 78%; Headcount Down 29%; Margin Up 56%
Surgery Center: Case Time Down 39%; Turnover Time Down 50%; Cases Per Day Up 60%
Pharmacy: Order-to-Available Cut 93%
MARGIN DOLLARS
FROM: $0.7M in 2000
TO: $40.9M in 2010
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SUMMARY
Byrne-san, If You Dont Try Something,
No Knowledge Will Visit You
Chihiro Nakao
LEAN PROVIDES UNFAIR
COMPETITIVE ADVANTGE
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The Lean Turnaround by Art Byrne
Available at lean.org/bookstore
-
Learn from:
Art Byrne
John Shook
More Speakers, Learning Sessions,
and Companies to be Announced!
$350 Early Registration Discount, register today
Team Discount: Send 4 people and the 5th person is free!
Register at lean.org/Summit
in Orlando, FL
-
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