27 Legend court, PO Box 10068, Ancaster, ON, L9K 1P2905-304-1833

www.Iflowmanagement.com

INFORMATION FLOW MANAGEMENT INC.

The six steps to create and implement a lean manufacturing environment

27 Legend court, PO Box 10068, Ancaster, ON, L9K 1P2905-304-1833

www.Iflowmanagement.com

INFORMATION FLOW MANAGEMENT INC.

If after review you have any questions contact Kit Staley at IFM Inc.905 304 1833 or visit the web site above.

The six steps to create and implement a lean manufacturing environment

Today, in most companies it is not a question of what to do ?

Process Reengineering - Total Quality Management Activity Based Costing - Cycle Time Management

Employee Empowerment - Value Added Team BuildingJust in Time - Total Preventative Maintenance

New Product Introduction - Statistical Process ControlCreating A Lean Organization - Being A Virtual Corporation

Etc - Etc - Etc

It is a question of how to do it

Differences in Approach to Change

BPR is a form of innovation (radical change)

Continuous improvement is an evolutionary process involving multiple smaller changes over time

The Total Business Cycle Time Concept (TBCT)

• Cycle Time creates value (cash) or it creates waste (cost)

• Cost is all non-value adding activities (waste) and typically accounts for 90% of an organization's activities

• Consumption of time is the consumption of cash and the reduction of that time creates cash: less working capital and more operating profit

• To be competitive now, time must be converted from cost (waste) to cash (value)… continually…forever

TBCT Process

Education/Training

Implementation Process

BusinessAssessment

ContinuousImprovement

ExecutiveAwareness

Vision Analysis Planning ExecutionCompetitive

Edge

Business Assessment

Education & Training

Facilitation

Focused Support

THE TOTAL BUSINESS CYCLE TIME LOOPS IN A BUSINESS

Strategic Business Development Loop

New Product Introduction (NPI) Loop

Supply Management Loop

Make/Ship Loop

Distribution Loop

Customer Expectation (New Products)

Customer Expectation Existing Products

Imagine The Vision

Total business cycle time inside customer delivery expectation for present and future products/services

Minimal inventory in all forms

Perfect quality products/services

Total cost performance excellence

Employee empowerment

A distinct competitive edge

Business Process Flow Strategic GoalEvolve Toward The “Perfect Business Process”

Lowest cost and highest quality via:• Minimal cycle time • Zero scrap or rework• Improved labour utilization and efficiency• Total flexibility• Perfect quality• Minimal support/maintenance costs• Minimal material handling or transportation• Low to zero changeover time• Batch size = 1• WIP ratio > 1

Business Process Flow Strategic Goal

This will be achieved through the planned

implementation of technical, procedural

and organizational modifications to the

present business process.

PEOPLE ARE

THE SOURCE OF

CONTINUOUS

IMPROVEMENT

People - The Drivers of TBCT

Evolution Issues

• From a variable expense to a value adding asset

• TBCT Process is dependent on employee empowerment

• Key Ingredients:– authority– motivation– skill– information

• From autocratic top down hierarchies to flatter participatory networks

Empowerment Requirements

Understand Role:

Motivated by Goal:

Provide the Proper Skills & Education:

• Employee’s role is to continually search for generations of waste and eliminate them.

• Remove all work between customer and any person who does not add value.

• Training to design and execute activities they perform.

A Participatory Management Model

• supports enforced problem solving

• is an open process not a manipulative one

• is not an ideal model - rather it is supportive of a CI environment

• sees traditional technical functions (e.g. quality control) as an operational function (part of operations job)

• provides grassroots support for the evolution plan

Making TBCT Work

Training &Education

Communications

& Objectives

Vision &

Strategy

Role Clarity &

Measurements

Skill -

“How To”

Information -

“What To”

Motivation -

“Want To”

Authority -

“Expected To”

People

Knowledge of discrete process elementsSingle skill Redundancy of peopleJob narrowly definedIndividual tasks Pay for Task Variable expenseSupervisor controlsOperatorsPush decision - making upEfficiency

Knowledge of whole systemMulti-skillRedundancy of functionJob broadly definedGroup accountabilitiesPay for KnowledgeFixed asset Leader concursProblem solversPush decision - making downCycle Time Quality

Traditional TBCT

Making Change Happen!1. Un-Freeze

Convince that what we’ve done until now is only the first step in a CI evolution

2. Re-PositionRe-position thinking:- education- readings- experience (pilot)

3. Re-FreezeNeed to Re-freeze

so people don’t revert to S.O.W.!

1.

Un-Freeze

2.

Re-Position

3.

Re-Freeze

Gaining CommitmentAlign Needs

The SELLING Zone Organization Needs

Organization Wants

Personal Needs

TBCT(Total Business Cycle Time)

ImplementationProcess

TBCT Process

Education/Training

Implementation Process

BusinessAssessment

ContinuousImprovement

ExecutiveAwareness

Vision Analysis Planning ExecutionCompetitive

Edge

Business Assessment

Education & Training

Facilitation

Focused Support

Decision Making

Information

Authority

Skill

ContinuousImprovement

People

Eliminate non-value added

Pull Concept

Process Flexibility

Strategic Planningtop down

Linear BusinessFlow

Batches of one/min. inventory

Mapping

PerformanceMeasurements

5S

Team BuildingProblem Solving

ProjectLeadership

ImplementationTools/Strategies

The CI Building Blocks

vcib

Operating Practice ChangesShop Floor Point Meetings + Office(Problem Solve/Morale/ProjectIdentification/Communication

Change/Improvement ProjectsReliability (TPM, SPC,etc,)Flexibility (Changeover, Multi-Skill)Capability ( Waste Reduction)

Strategic Process ChangesPull Systems/Linear FlowCapacity/Demand PlanningPlant Layout

45%

25%

30%

TotalSavingsContribution

STATUS

PLAN EXECUTION% %% %% %

% %% %% %

% %

CI Change EnvironmentWhere do we start - which brick first

TEAM

MEMBER

TEAM

MEMBER

TEAM

MEMBER

TEAM

MEMBER

TEAM

MEMBER

PROJECT LEADER

PROGRAM LEADER

APPROVAL TEAM

MANAGEMENT TEAM

(VP’s/DIR’S/MGR’S)

TBCT Implementation Approach

• Promotes early involvement/education/facilitation

• Formal implementation structure• Management approval and problem

escalation• Strong participation at all levels

(Planning & Implementation)

Total Business Cycle Time Reduction Is A Large

Undertaking• You’re trying to move a whole organization toward a cycle

time management approach

• How do we avoid lack of management control but still get everyone involved?

• How do we avoid the dabble syndrome?

• How do we avoid the multi-program on -project syndrome?

The “Evolution Plan” Concept

The ProblemThe lack of a consolidated strategic plan that provides sufficient focus for the

organization to effectively plan and execute its evolution into the future.The SolutionThe “Evolution Plan Concept” allows for all strategies to be consolidated into one

plan and also ensures that a consistent message is communicated to all levels in the organization. The focus of the Evolution Plan is Cycle Time Improvement - a key to the other evolution imperatives.

Cycle Time Improvement (and the techniques for managing Cycle Time) acts as a central and universal theme and measurement device for the generation of all evolution project activities and the results necessary for a World Class business.

A short Cycle Time operation is the outcome of a successful Evolution Plan implementation.

The Evolution Plan

• Provides 1 single Strategic Plan with contribution at ALL levels• Encompasses the Mission for the organization• Integrates into the company 5 year plan• Provides input to the budgetary process• Allows a framework for Continuous Improvement

Management Team

Evolution TeamDepartments Resources

Existing Organization

Approval Team

Approval Team

The Evolution Organization

• A team approach with management involvement and strong participation at all levels is strongly suggested

• Delegation of involvement should only take place after a clear mandate and scope for any evolution activity has been set

• A team structure needs to exist outside the existing department structure

TBCT Implementation Benefits

• A proven process

• Integrated with appropriate education & training

• Helps develop an organization-wide Mission Statement (tied to Company’s Strategic Plans)

• Encompass the total implementation cycle, leading to full institutionalization

• Supports the development of a participative culture and forms a team approach to problem solving (involvement of ALL functions at ALL levels)

• Provides an organized approach towards change for Continuous Improvement (keeping the momentum going)

• Ensures implementation success!

The Evolution Plan Team Structure

Planning Forum Management Team

Evolution ReviewTeams

Evolution Plan

Communication

PLANNING EXECUTION

Programs ProgramsPrograms

ProjectProject Project ProjectProject Project

Step1Step 2

Step 3 Step 4

Step 6

Step 5

Team Members

Tasks

The 6 Steps to Implement Total Business Cycle Time Goals

1. ManagementSteeringCommittee

Mission Statement Define Goals Management Team

2. Planning Forum Position AnalysisTeam Plans

As Is SituationFocus PlanningEffort

SNR Staff Members

3. Review Teams Detailed Plans Define ActionsDefine Projects

SNR Staff MembersHourly, Salary

4. ManagementApproval

Approve Plan Buy-in At All Levels Steering Committee,Sr. Staff, Hourly,Salary

5. Program/ProjectKickoff

Start to implement 1st

project team meetingsSchedule and co-ordinate

Program and ProjectLeaders

6. SteeringCommitteeApproval

Monthly Approval ofProjects

Ensure DirectionEnsure PrioritiesReview Resources

Steering CommitteeProgram LeadersProject Leaders

Step Activity Output Purpose Responsibility

The Evolution Plan Team Structure

The Mission Statement• Define role of approval team• Risk assessment• Management forum agenda • Management actions necessary

MANAGEMENT TEAM

(Approval Team)

PLANNING

Step 1

TBCT Implementation Preparation

Do Not:• Under estimate the tasks• Become frustrated

Be Prepared:• To plan• To approach in a disciplined manner• To follow the guidelines

Role of Approval Team(Steps 1 to 4)

• Provide continuous contributions to the “team approach” concept to the entire organization

• Conduct ongoing risk assessment for success of IFM “Evolution Plan” (and support via risk elimination action)

• Adopt a participative management style for delegating the generation of the “Evolution Plan”

• Approve (or provide constructive input) to the Evolution Plan at Step 4

• Delegate to members of the Planning Forum:

I) the mission statement (develop first draft only)

II) responsibility for generating the Evolution Plan

Deliverables Expected from Approval Team Kick-Off Meeting

e The Mission Statement

e The Mission Statement Presenters

e Clear Definition of Approval Team Role

Management Forum Membership

Closure on the Management Forum Agenda

a Rough Schedule for Evolution Plan Generation

o First Path Implementation Risk Assessment

m A List of Management Level Actions

m A “Cohesive” Management Team

The Successful Launch!

• Good Planning

• Discipline

• Following guidelines

• Managing the pressure of change

• Correct participative culture

• Smooth execution of the plan

Some Prerequisites For Successful Implementation

• Committed and enlightened management team

• Ability/commitment to communicate/educate all levels

• Satisfactory resource allocation/invest in training

• Strong participative culture base

• Sound project management/planning/facilitation skill set

• Careful management of change– communication (across whole organization)

– involvement (all levels)

– reinforcement (continuous)

– clear visibility of change (early visibility)

– “fear free” environment (demonstrated)

• Pre-education of all participants on:

1. Continuous Improvement concepts

2. Implementation tools

Approval Team Member Responsibilities

• Approve the Evolution Plan and project activities (phases)• Attend program review and approval meetings• Provide actions to redirect Evolution project priorities and

status• Identify requirements for the re-organization of the

Evolution program and projects• May also serve as Program Leader

Rules of Membership…• provide clear direction and decisions • consider project recommendations• be prepared to be participative and work to team consensus,

both within and outside Approval Team

The Evolution PlanTeam Structure

Position Analysis• Define

Baseline/Entitlement/Benchmark• Detailed organizational maps• Form review teams (areas of focus)

PLANNING

FORUM

MANAGEMENT TEAM

(APPROVAL TEAM)

PLANNING

Step 2

Measuring Cycle Performance Levels

Baseline: Current level of performance

Entitlement: Should be level of performance that can be achieved with present capital investment

Benchmark: Best competitive performance may need additional resources or technology

The Evolution Plan Team Structure

Planning Forum Management Team

Evolution ReviewTeams

Evolution Plan

Communication

PLANNING EXECUTION

Programs ProgramsPrograms

ProjectProject Project ProjectProject Project

Step1Step 2

Step 3 Step 4

Step 6

Step 5

Team Members

Tasks

Program Leader Responsibilities

• Manages the process rather than gives approval

• Receives status, inputs and problems impeding project

progress from the project leaders and coordinates solutions

• Provides support and coaching

• Reports overall status on the projects grouped under the

package

• Coordinates the approval team activities for each project in

the program

• Ensures that approval milestones are completed prior to a

project proceeding to the next phase

Project Leader Responsibilities• Manages the project activities

• Reports status to program leader

• Calls project review meetings

• Coordinates action lists/ meeting minutes

• Coordinates presentations to Approval Team

• Identifies project schedule problems to program leader

• Provides team focus & leadership when required

• Identifies project resource requirements and/ or constraints

• Identifies external to project team requirements (i.e. training, etc.)

The Project Leader

• Ability to accept responsibility

• Ability to Coordinate

• Ability to make trade-offs

• Good communication skills

• Respected in all operations

• Prepared to work under pressure

• Ability to differentiate between the important and the imperative

Forum Team Responsibilities

• Agree forum support and schedule requirements with forum leader

• Agree and perform tasks or actions assigned and coordinate solutions

• Provide status on tasks/actions to forum leader against agreed schedule

• Keep immediate supervisor informed of team support requirements and task status when non-team priorities conflict with team priorities

• Be prepared to “work as a team”

Management Approval Meeting

• Presentation of project process (detailed review)

• Request approval to proceed from Approval Team

• Present resources & funds required to complete

project

• Give brief on return-on-investment/ payback

• Update schedule

• Outline of detailed work performed to-date

Approval Team Actions• Provide commitment to the “team approach”

concept to the entire organization

• Agree on project goals (scope & mandate)

• Define project vs. functional authority and responsibility

• Agree choice of project leader

• Choice of the functional manager(s) to participate in the program/project structured

• Supply adequate resources to the projects

Monthly Evolution Plan Review• Presentation of project process

• Progress update on overall Evolution Plan

• Escalation of impediments to progress on each project

• Review of resources across whole Evolution Plan

• Define Approval Team actions

• Deliberate on status change to projects

• Identify new projects

• Arrange update of Evolution Plan

Key Principles To Remember

• Must manage as a system

• Simplification of process (+ product)

• Eliminate “non value added” activities

• Improvement must be continuous

• People are the key evolution ingredient

The Tools Require Everybody To Focus On:

• Right product

• Right time

• Right price (cost)

• Right quality

• Right quantity

Total Business Goals “Customer Satisfaction”

Baseline/Entitlement/Benchmark• Baseline, Entitlement and Benchmark are 3 levels of

performance (to a number of criteria], at which a business (or part of a business) may function

• It should be the goal of each function or subsystem to move from BASELINE to ENTITLEMENT, then to BENCHMARK in the parameters critical to the business:

– cycle time

– cost

– quality

– etc.

Continuous Improvement Environment

Total Quality Improvement

Capital

input

Zero

capi

tal

TotalBusiness Cost Reduction

TotalCycle TimeImprovement

Benchmark Baseline

Entitlement

Each aspect of a corporation is currently performing at some measurable level, referred to as BASELINE performance, e.g. unit cost, manufacturing cycle time, time to complete a new design, order entry cycle time.

Baseline

EntitlementThe corporation has already made investments in plant, equipment, software, designs, processes and people.

These investments ENTITLE the corporation to a level of performance, most often substantially higher than BASELINE.

We refer to the level of performance available with the CURRENT resources (and investments) as ENTITLEMENT performance.

To reach ENTITLEMENT requires that the ENTITLEMENT level be defined, constraints be identified, and corrective action taken.

Benchmark

BENCHMARK is defined as best competitive performance, most often requiring additional or modified resources to meet BENCHMARK in addition to isolation of constraints and corrective action.

To get to BENCHMARK, with intelligent addition of resources, requires that ENTITLEMENT is fully understood and close to realization before additional resources are committed.

How Are BASELINE, ENTITLEMENT and BENCHMARK Used?

• Establish Levels

• Work Toward ENTITLEMENT

• Identify Impediments

• Establish Causes

• Develop Action Plans

• Redefine BASELINES

• Make Realistic Investments

• To Reach BENCHMARK