the lean strategy - lean frontiers...the lean strategy by dan jones, michael balle jacque chaize,...
TRANSCRIPT
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Copyright 2017 by Orest J. Fiume - All rights reserved. 1
The Lean Strategy
Orest J. Fiume
Retired Vice President - Finance
The Wiremold Company
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Wiremold Before and After Lean 1990 2000
Assessed Value $30 Million $770 Million
West Hartford:
Sales per Employee $90K $240K
Gross Profit 38% 51%
Throughput Time 4-6 Weeks 2 Hours – 2 Days
Product Dev’l Time 2-3 Years 3-6 Months
# Suppliers 320 43
Inventory Turns 3.4 18.0
Working Cap % Sales* 21.8% 6.7%
* W/C = A/R + Inv – Trade Payables
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LEAN
A Business Strategy
Not
A Manufacturing Tactic
Not
A Cost Reduction Program
What is Strategy? Some Definitions:
A high level plan to achieve one or
more goals under conditions of
uncertainty
Shaping the future by attempting to get to desirable
ends with available means
A system of formulating and implementing a plan to
create competitive advantage
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“If we continue to see Lean
through
traditional management thinking
we will only get traditional
results”
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The Lean Strategy
By Dan Jones, Michael Balle
Jacque Chaize, Orest Fiume
The Lean Strategy is different in:
-Creating Competitive
Advantage
-Implementing the Strategy
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A Simple Example Two Companies in Same Industry Using Same Equipment
Company A
Set Up Takes 1 Hour
Company B
Set Up Takes 1 Minute
• Who Has Lowest Cost?
• Who Can Provide Best Customer Service?
A Small Process Improvement Provides
Enormous Strategic Advantage
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Time-Based Strategy
Lead-Time Reduction
Critical for driving improvement to your customers
Source: TBM
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Formulating Lean Strategy
Use Time to Differentiate
Yourself from Your Competitors
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Time is the Currency of Lean
Traditional Thinking about
Implementing Strategy
-Top down decision-making
-Separate strategy from execution/operations
-Manage by the numbers
-Processes & systems designed by expert:
Buy “best practices” -Silos & rule-based bureaucracy
-Launch many new projects
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Top-down decision-making
Lean decision-making
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Form a Learning Plan
Commit to a Learning Curve rather
than an Action Plan
-What training is needed for daily problem
solving?
-What team kaizen effort are needed?
-What targeted experiments are needed to
identify root cause and countermeasures? 13
Organize for learning
Respect for people = challenge and support
-People-centric systems & processes
-Line Managers are responsible for
building capabilities through daily
practice of Learning By Doing
-Ask questions rather than tell people
what to do
-Not about optimizing or rolling out “best
practices
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Find the right problems
-By going to the Gemba
-Support solving immediate problems
-Show commitment to learning
-See the underlying problems
-Capabilities needed to solve them
Face Reality
Chose Operational Process Metrics that:
-Give a clear picture of the current
condition
-Clearly indicate progress in the
desired Progress Direction
-Convert to Lean Management
Accounting
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Frame the Issues
Describe the Challenges
you have in terms of
Improvement Directions
that all can understand 17
Set improvement directions
Which physical changes will minimize resource utilization
So everyone can see how they
can contribute
Be clear about the business case Quality & innovation grow sales
Flow saves cash
Kaizen lowers cost
Freed-up capacity for new products saves capital
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Why Doesn’t Everyone Do “Lean”?
• The Concepts are Simple
• “Simple Ain’t Easy” – Thelonius Monk
Why Is It So Hard?
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Most Companies View “Lean” as
Some Manufacturing Thing • Just an Element of Strategy
• Delegate it Down in the Organization - But Don’t Remove the
Barriers
– Make the Month Mentality
– “Canned” Computer Systems
– Standard Cost Accounting Systems
– Inappropriate Performance Measurement
Must Be Company Strategy To Be Successful
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Implementing Lean Strategy
Requires Lean Thinking
It is a Cultural Change That
Requires Leadership…
Because in the End
It’s All About People
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