Group 4 Week 1 Learning PointsNovember 10th, 2011

Lean (Toyota Production System), Lean (Toyota Production System),

a risk free way to execute a strategy

Yves MerelFCI Automotive

VP Industrial Development

ymerel@gmp11.hbs.edu

Group 4 Week 1 Learning PointsThe visible part of Lean

(Lean)

(Not Lean)

Group 4 Week 1 Learning PointsThe system underneath

Just

In

Tim

e

Customer

Satisfaction

Delivery Quality .

Cost

Just

In

Tim

e

Jid

oka

Kaizen

Standardized Work

Hoshin Kanri

Immediate reaction

to any process issueWaste elimination

on process lead time

Problem Solving Workshops

Shop Floor Visual Control

Strategy Deployment

Improvement Suggestions

Management Routines

Progressive Targets

Group 4 Week 1 Learning PointsMy Lean Background

• I discovered Lean while working for , 10 years in France and

in the USA (Valeo is doing Lean with Toyota support since 1992)

• Then during 3 years I led the Lean transformation of (a British automotive components supplier)(a British automotive components supplier)

• And 3 years ago I joined to lead the Lean program from

Singapore

• For 6 years I’m coached by Freddy Balle (retired CEO, implemented Lean at

Valeo, Sommer Allibert, Faurecia and author of The Gold Mine and The Lean Manager)

• Pierre Vareille (Wagon CEO, FCI CEO) uses Lean to execute his strategies

Group 4 Week 1 Learning PointsFCI Group

Automotive

Division

ElectronicDivision

Is one of the largest connector manufacturers, owned by Bain Capital since 2005

Its 14,000 employees are achieving a turnover of 1.3 billion €

In communications

In your

credit card

In your car

In electric

vehicles

In trucks In your

Cell phone

In hospitals

In your

computer

In your TV

Microconnections

Division

Division

Group 4 Week 1 Learning Points24 Factories

EuropeBesancon, France

Mantes , France

Epernon , France

Nuremberg, Germany

Mattighofen, Austria

Tatabanya, Hungary

Turin, Italy

AmericasHuntingdon PA, USA

Huntingdon PA, USA

Juarez, Mexico

San Pedro Sula, Honduras

Sao Paulo, Brazil

AsiaBangalore, India

Cochin, India

Cochin, India

Cochin, India

Changi Singapore

Jurong Singapore

Senai, Malaysia

Nantong, China

Nantong, China

Dongguan, China

Namyang, Korea

Ishioka, Japan

Group 4 Week 1 Learning PointsLean System examples

Just

In

Tim

e

Customer

Satisfaction

Just

In

Tim

e

Jid

oka

Kaizen

Standardized Work

Hoshin Kanri

Immediate reaction

to any process issueWaste elimination

on process lead time

Group 4 Week 1 Learning PointsThe amazing Just In Time principle

Holding more inventory does not help to delivery on time

Group 4 Week 1 Learning PointsThe amazing Jidoka principle

Rejecting more products does not improve the quality

Group 4 Week 1 Learning PointsLean System examples

Just

In

Tim

e

Customer

Satisfaction

Just

In

Tim

e

Jid

oka

Kaizen

Standardized Work

Hoshin Kanri

Problem Solving Workshops

Shop Floor Visual Control

Improvement Suggestions

Management Routines

Group 4 Week 1 Learning Points

• With Anil Kannat (Global Business Service Director) we launched in June 2011 a Lean

system focused on labor efficiency improvement

• During 3 days with a team we analyzed, simulated ideas and implemented

many suggestions. We finally reduced the lead time from 43.5 to 23 hours

• G.Kumar (GBS Lean Manager) then continued by leading one workshop per week

Kaizen Workshop at Cochin

• G.Kumar (GBS Lean Manager) then continued by leading one workshop per week

• We expect to save by the end of the year 25% productivity on 130 people

Group 4 Week 1 Learning PointsVisual Control Routine at Ishioka

• With Takeuchi san (Ishioka Factory Director) in May 2009 we trained all his

managers to perform the Visual Control Routines

• We practiced these daily routines on the shop floor with each manager

• In one hour maximum they have to go around all production cells and check if

any delay may impact the customers deliveriesany delay may impact the customers deliveries

• Then encourage the operators to make improvement suggestions on it

Group 4 Week 1 Learning PointsLean System examples

Just

In

Tim

e

Customer

Satisfaction

Just

In

Tim

e

Jid

oka

Kaizen

Standardized Work

Hoshin KanriStrategy Deployment Progressive Targets

Group 4 Week 1 Learning PointsD

ire

ct L

ab

or

He

ad

cou

nt

Sa

ve

dHoshin Kanri at Wagon

Since we had labor intensive operations in high cost counties,

we chose in May 2005 to target: Direct Labor – 1 %/month

Dir

ect

La

bo

r H

ea

dco

un

t S

av

ed

Over 3 years 915 saved out of 3081

Group 4 Week 1 Learning PointsHoshin Kanri at FCI

2

3

4

5

6

7

8

9

10

11

12

Nu

mb

er

of A

cc

ide

nts

40

60

80

100

120

140

160

180

200

Qu

ality

Co

mpla

ints

Safety - 3 %/month Quality - 2 %/month

Since we wanted to grow our sales, we chose in Sept.2008 to target:

0

1

2

Group target Group 6MRA Group actual

0

10

20

30

40

50

60

70

80

90

Pla

nt

Flo

w tim

e in

day

s

Group target Group 6MRA Group actual

0

20

40

Group target Group 6MRA Group actual

0 000

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

MP

M

Group target Group 6MRA Group actual

Inventory - 2 %/month Delivery - 2 %/month

Group 4 Week 1 Learning PointsA toolbox full of Lean solutions

• Kanban

• Flow Rack

• Leveling

• Small Train

• Milk Run

• Single Piece Flow

• Flexible Manpower Line

• Externalized Changeover

• Minimum Technical Solution

• Andon Light• Milk Run

• Cross Dock

• Zoning

• Red Bin

• Poka Yoke

• First Defect Stop

• Andon Light

• Kamishibai

• Concept Paper

• Set Based

• Design Checklist

• Autonomous Team

But copying Lean solutions only provides local improvement, rarely sustainable

Group 4 Week 1 Learning PointsOur way to lead the changes

• A set of Strategic KPI tracking the continuous improvement speed (at all levels of the hierarchy from the entire group to every single operating team)

• A Lean Manager assigned in each site, leading workshops and

implementing visual control (trained on Lean tools and leadership techniques)

• A small team of Lean Experts leading workshops, training people

and auditing processes (Quality, Supply Chain , HR, Manufacturing Engineering)

• A quarterly Lean Review for managers to meet their peers, visit a

factory, share good practices and learn about Lean management

• A structured Communication (feedback emails, news letter, seminars, awards)

• A yearly CEO Visit at each factory to review, challenge and

recognize the continuous improvement

Group 4 Week 1 Learning PointsLean Pros and Cons

Advantages:

• It is less risky than massive breakthrough

• It is free of investment

• It is applicable on any type of process

• It is a structured way to execute a strategy

Requirements:

• It needs a mid term strategy

• It needs a boss leading it 15% of his time

• It needs an expert implementing the system

• It needs one manager per site implementing the solutions

Group 4 Week 1 Learning PointsFinancial Impact

2008 2009 2010 Evolution

Missed Delivery 6MRA % 35 25 20 -43%

Quality Complaints 6MRA 149 104 59 -60%

Sales M€ 1 096 935 1 298 18%

Active Suppliers Number 1 083 1 018 888 -18%Active Suppliers Number 1 083 1 018 888 -18%

Material / Sales 38% 37% 40% 6%

Safety Accidents 6MRA 8.3 2.3 1.7 -80%

Labor / Sales 31% 32% 27% -12%

EBITDA / Sales 13% 12% 14% 8%

Inventory Flow Time 6MRA Days 60 48 36 -40%

Cost of Investments Capex / Sales 6% 5% 3% -49%