an introduction to the lean business model

www.principalityconsulting.comwww.principalityconsulting.co

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An Introduction to the Lean Business Model

www.principalityconsulting.com

Overview • Lean Model• What is Lean?• Lean Business Journey, Timing & Themes

– Standardisation & Reducing Variation

– Identifying & Eliminating Waste

– Inventory Management

– Stuck in First Gear

Health and SafetyEnvironment

Ethics and ComplianceEmployee engagement- Reward&

RecognitionEmployee engagement- Talent

DevelopmentEmployee engagement-

Communication

Disaster Planning

Business Planning

Key Account ManagementNew Product Introduction

Customer ServiceSales and Operations Planning

Lean Tools

Lean Tools Training

Lean Improvement

Product Quality

Research and Development

Technology Transfer

IT InfrastructureBranding

Act Plan

DoCheck

The Lean Business and Operational Excellence

Order Fulfilment

Lean Business

What is lean?A quick reminder…

Lean and Flow aren’t new

Any colour as long as it’s

black!

Manufacturing at Highland Park in 1913

When did it all become so complex?

We want variety!

Variety means...•Colour changes•Body and shape changes

Which, in turn, means...

• Increased skill requirement• More parts and part numbers

Which, in turn, means…•Process islands •More complex scheduling

Which, in turn, means…

Spaghetti World!

Assembly Components Piece Parts Process Material Information

What is Lean Thinking?Inputs Your Process Outputs

1st Step - ID your Value Streams and create flow with what resources you have

Inputs Your Process Outputs

MRP, Shared Resource, unbalanced shifts and long C/O times

Value Stream 1

Value Stream 3

Value Stream 2

Value Stream 4

2nd Step eliminate the “knots and remaining tangles” by dedicating resources to value streams - commit yourself to single piece flow!

Input s Your Process Outputs

Value Stream 1

Value Stream 2

Value Stream 3

Value Stream 4

Lean Business Model•Focussed on maximising profitability and generating cash

•Links seamlessly with OE deployment and Sales and operations planning

•Supports a plant-specific roadmap•Drives local involvement and competition•Combines all current best practice

Lean Business Journey

Time

Performance

Standardisation of new system and methods

Understand the waste in the current system

Reduce variation

Previousperformance

Month on month performance improvement

Lean Business Journey – 5 Phases

Time

Consistency Continuous Improvement

Habitual Behaviour

Performance

Gaining Control

Getting Ready

Lean Business Journey - Timing

Time


Habitual Behaviour

Performance

Gaining Control

Getting Ready

12 – 18 Months 18– 24 Months 24 – 36 Months3 – 12 Months0 – 3 Months

Lean Business - Themes

1

Getting Ready Gaining Control

Consistency

Continuous Improvement

Habitual Behaviour

Standardisation and Reducing Variation

Guaranteeing Output is a Manufacturing Plant’s Number 1 Priority

QUALITYQUALITYPPEOPLEEOPLE

PPARTSARTS

PPLANTLANT

COSTCOSTPPROCESSROCESS

HOWINPUT OUTPUT

DELIVERYDELIVERY


PPARTSARTS

PPLANTLANT


HOWINPUT OUTPUT

DELIVERYDELIVERY

Leaders add value by successfully controlling the inputs – the 4 P’s

If the inputs are right the output is guaranteed

Why is there so much firefighting in a typical day?


PPARTSARTS

PPLANTLANT


HOWINPUT OUTPUT

DELIVERYDELIVERY


PPARTSARTS

PPLANTLANT


HOWINPUT OUTPUT

DELIVERYDELIVERY

If the inputs aren’t standardised then there could be: 10 People variables x 10 Parts variables x 10 Plant

variables x 10 Process variables

10 x 10 x 10 x 10

How can you manage 10,000 possible outcomes?

?

Standards: Effect on Variation and Quality

10x10x10x10= 10,000 Possible

Outcomes

5x5x5x5 = 625

Possible Outcomes

Current:• Variation

• Errors

•Little control

• Reactive

Future• Control

• Improved quality

• Predictability

• Prevention

From control into continuous improvement

• The systems, people, equipment, product and all need to go from control to habitual improvement

• Areas from clutter to clean• Engineering from breakdown panic to predictive calm• Process from fickle to dependable • Product from changeable to consistent• Shift management from reactive to proactive• Continuous improvement from special effort to daily habit

10,000 Outcomes

5,000 Outcomes

1,000 Outcomes

250 Outcomes

Control Consistency Continuous Improvement

Chaos

10,000 Outcomes

5,000 Outcomes

1,000 Outcomes

250 Outcomes

Control Consistency Continuous Improvement

ChaosGaining Control Consistency Continuous

ImprovementHabitual

Behaviour

The Golden Triangle

Creating Standards for Operational Excellence

Standard Work Standard description of a task or

process, which if followed consistently, ensures the same output

Standard Management Standard process to ensure

standards are being met

Visual ManagementMake problems visible and bring them to the attention

of the user.Status within 10 seconds.

The Golden TriangleBasis for daily error avoidance and control

Standard Work

Visual ManagementStandard Management

5SReject Control

Daily Maintenance

Identifying and Eliminating Waste

In Manufacturing there are 7 Traditional Types of NVA or Waste•Waste of T ransport •Waste of I nventory•Waste of M ovement

•Waste of W aiting•Waste of O verprocessing•Waste of O verproduction •Waste of D efects and Rework

4 weeks

HOURS 1000 2000

AVERAGEINVENTORY

INVENTORY

High Inventory Manufacturing

HOURS 1000

1.5 weeks

INVENTORY

Low Inventory Manufacturing

Has a positive impact on;• Quality and scrap• Engineering change introduction• Margin

• Overtime & resources at month-end• Capital investment• Due date performance

• Improved forecast reliability• Leadtime-

• Leadtime is proportional to inventory

1

Getting Ready Gaining Control

Consistency

Continuous Improvement

Habitual Behaviour

Lean Business Journey - Timing

Time


Habitual Behaviour

Performance

Gaining Control

Getting Ready

12 – 18 Months 18– 24 Months 24 – 36 Months3 – 12 Months0 – 3 Months

Stuck in first gear and can’t get traction!

“Lean production has dramatically lifted the competitiveness of many manufacturing companies and the value they deliver to customers.Despite these triumphs, many firms I visit are stuck in first gear on their initial lean efforts. They are trying to create flow but can’t somehow get traction.An overlooked and recurring pitfall that I’m seeing more often is a lack of “basic stability” in operations.”

Art Smalley Lean Enterprise Institute

A poor business will get stuck in first gear…

Time


Habitual Behaviour

Performance

Gaining Control

Getting Ready

Stuck in first gear


Time

Performance


Journey Summary • Get Ready - To understand the current state and implement actions to get started

• Gain Control – To reduce surprises and firefighting in order to focus on future improvement strategy

• Consistency - To deliver some quick wins, align by value streams, develop the improvement infrastructure and up-skill middle management

• Continuous Improvement - To engage the majority in focused improvement, achieve a revolutionary change, extend the scope to the supply chain and develop a growth strategy

• Habitual Behaviour - To feedback all the positive improvement experience into the re-design of equipment, systems and suppliers

– Standardisation & Reducing Variation

– Identifying & Eliminating Waste

– Inventory Management

– Stuck in First Gear