STERLING TALLAHASSEE SUMMIT February 8, 2018

Debra J. Shultz, Senior Manager

Quality Programs & Events, NextEra Energy, Inc.

KAIZEN Wha-a-a-t?? How to Prepare for an Effective Kaizen Event

A Little Bit about NextEra Energy, Inc first…

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• NextEra Energy is North America’s top producer of energy from wind and sun, with a greenhouse gas emissions rate among the lowest of any large power company

• We operate more than 45,000 MW of generating capacity

• 2016 revenues totaled approximately $16.2 billion

• We have nearly 15,000 employees in 30 states and Canada

NextEra Energy, Inc. is a leading clean energy company

About Our Company

No. 163 on Fortune 500

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NextEra Energy is comprised of two great businesses

No. 163 on Fortune 500

A premier regulated utility… …and a diversified, competitive power producer

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Florida Power & Light Company

• FPL is the largest electric utility in Florida – 4.9 million customer accounts – One of the largest rate-regulated

electric utilities in the United States • FPLs typical customer bill is the

lowest in Florida – In 2016, FPL’s rate was the lowest in

Florida among reporting utilities for the seventh year in a row

– 1,000-kWh residential customer bill is approximately 25 percent lower than the national average

– Service reliability is better than 99.98 percent

FPL is one of the nation’s largest regulated utilities

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• More than 95 percent of our electricity comes from clean or renewable sources, including wind, solar, natural gas and nuclear energy facilities

• We now operate more than 19,882 net MW of wind capacity in 29 states and Canada

• NEER has been involved in clean energy development since the 1980s and now has a cumulative investment of more than $30 billion in wind and solar energy facilities

NextEra Energy Resources, together with its affiliated entities, is the world’s largest generator of renewable energy from the wind and sun

Energy Resources Portfolio

Back to our original programming…

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Let’s start with the basics - How should we pronounce it?

• A really famous sports car has the same problem!

https://www.youtube.com/watch?v=hyc96YnwGD4

• Do you pronounce it Kaizen or Kaizan? Which is it? https://www.youtube.com/watch?v=_EbZhR9pJSE

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This Kaizen training includes three separate topics

Today we will focus on the Kaizen Overview

• Kaizen Overview • Kaizen

Approaches • Team select • Principles • Lean Tools and

Techniques • Action Plan

• Facilitation skills • Leading Teams • Idea Generation

& discussion • Tool selection • Overcoming

roadblocks • Project Mgmt.

Part 1 - Overview Part 2 - Facilitation Part 3 - Execution

• Preparation and Execution deep drive

• Detailed Pre-Planning

• Execution Roadmap

• Post Kaizen steps (e.g. Report out)

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Today’s “WHAT” -- Kaizen Overview

Agenda • Kaizen Defined

• Criteria for Selecting a Kaizen

• Event vs. Blitz

• Kaizen Process Overview

• Key Members

• Stages (Pre-Kaizen, Kaizen, Post Kaizen)

• Principles

• Timeline

• Tools used in Kaizen Events

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Is it a Six Sigma, Lean or Kaizen problem? When should we choose Kaizen?

Understand Six Sigma, Lean, and Kaizen methodologies in order to create an effective business improvement strategy

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• Structured approach to problem solving

• Bias towards action • Based on the philosophical

belief that everything can be improved

• A select team work a problem within a short amount of time

• Applies to all processes, even those that cross organizational boundaries

Kaizen is a rapid focused application of Lean principles to reduce waste

and improve a process

Kaizen Defined

What is a Kaizen?

Kai = Good Zen = Change

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What is the difference between a Kaizen Blitz and an Event?

Activities Kaizen Blitz Kaizen Event

1 to 2 months prior

Perform Needs Analysis – Determine which approach is needed GEMBA - Go See

Time Frame 1 - 2 days 3 - 5 days

Scope Smaller scale problems Larger more complex problems

Pre- Kaizen Meet with Sr. Leadership Develop Team Charter

SIPOC Current State Map

Data Collection & Analysis Select Team Members

Identify / Interview SMEs Select Activities for Event

Team Training

Kaizen Review VOC requirements Map Future State ID improvements

Create Action Plan Daily out-briefs / Report outs

Create Plan for follow-up actions (BLITZ ONLY)

Post Kaizen Track action items and primary metric Status reporting

30 / 60 / 90 Day follow-ups

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1. Identify an opportunity 2. Analyze the process 3. Develop an optimal solution 4. Implement the solution 5. Study the results 6. Standardize the solution 7. Plan for the future

Continuous cycle of Kaizen activity has seven phases:

A Kaizen event is a process focused improvement method

Iteration is the continuous repetition of an operation or procedure – hence the term “continuous improvement”…

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prior to event) – Clearly define the Kaizen objective – Select team members, perform logistics, notifications, data

collections, and prepare project charter and beginning of event)

– Create or validate the value-stream map including a resource flow layout for all the process (people, paper, material, information)

– Carefully observe, then collect needed metrics for tasks or steps in the selected process

Kaizen Mirrors the DMAIC Framework

Parallels DMAIC phases using Lean Tools

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• Analyze (Mid-Event) – Quickly validate root causes and identify sources of waste – Review waste elimination techniques, then brainstorm process

improvements for eliminating non-value added tasks and reducing variation

• Improve (Mid-Event) – Map the ideal state and / or future state process (see next page) – Test the improvements, if possible, then fine-tune to ensure the

process is capable – Create action item list to accomplish improvements

• Control (Post Event) – Create Standard Operating Procedures and training for

employees – Present results to Management Team for immediate approval – Complete follow-up, monitor results over time

Kaizen Mirrors the DMAIC Framework

Parallels DMAIC phases using Lean

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Let’s Get Started! To Kaizen, or not to Kaizen….That is the question

Criteria for Selecting a Kaizen

• Is the problem/situation linked to the strategic plan?

• Are the data readily available?

• Has a process owner(s), stakeholders, subject matter experts

been identified?

• Is the process highly visible to staff or customers?

• Does the project have a high probability for success?

• Is the scope narrow enough for a kaizen event?

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Kaizen events should foster an environment of openness, innovation and teamwork

Principles • Turn off / tune in – it is a FAST rollercoaster ride • Management is visible to support • There is no rank among team members • Be open minded – no agendas • Respect each other • Stay on task • Foster a positive attitude • Ask questions and participate • Think of “out of the box” ideas -

go for Quantity

TEAM = Together Everyone Achieves More!

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Who should attend the Kaizen event?

ANYONE who touches the process!!!

Key Attendees

• Subject matter experts • Process owner(s) • Additional Stakeholders • One or two front-line workers (individuals that

perform the process on a regular basis) • An outside novice (a “Nun” - someone

unfamiliar with the process) if applicable • A facilitator from outside the functional area to

prevent that individual from unconsciously steering the event in a particular direction

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Kaizen preparation is important for the success of the event

Pre-Kaizen – Create the Charter

Conduct pre-planning meetings to develop the Charter with your team - include the following:

• Problem Statement • Project Goals • Attendees • Scope • Timeline • Project Sponsor(s) • Data Sources

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Walk the process to gain a high level understanding of the flow, inputs, outputs and current opportunities

Pre-Kaizen – Walk the Process (GEMBA)

• Interview SMEs

• Ask Probing questions

• Build SIPOC and Process Map based on real-time observations

• Document issues and opportunities

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Conduct data analysis to understand current trends and identify potential root causes

Pre- Kaizen – Conduct Data Analysis

• Analyze the data • Look for trends and

opportunities • Define measurement

targets • Use statistical tools to

validate current data (Run charts, Pareto, Hypothesis Testing, Regression)

Source: HR Direct Initials: LKL 8-19-2016

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KAIZEN Timeline

Kaizen preparation is important for the success of the event

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o Define problem o Identify scope o Select participants o Create charter o Identify metrics o Select event dates

& location o Forward “Save the

Date” meeting invite to attendees

o Collect data to understand current performance

o Interview SMEs o “Walk the

process”/ GEMBA o Determine

objectives (SMART goals)

o Confirm Event date and time with attendees

o Meet with core team to review data

o Finalize data analysis

o Present initial findings to sponsor

o Establish meeting agenda for Kaizen event

o Inventory required event materials (sharpies; post-its; flip charts, etc.)

o Forward an Event calendar reminder

o Arrive early to setup room & test presentation equipment

o Establish flip charts for “Parking Lot”, “Action Items”

o Help team create a Code of Conduct

o Designate roles for individuals

Event Day Post KAIZEN

o 30/60/90 day check-in

o Lesson learned o CELEBRATE!!! o Measure the

effectiveness of improvements – did the team accomplish what they set out to do?

Weeks Prior to Event

6 to 8 weeks 4 to 6 weeks 1 to 4 weeks

4+ 1+

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Review the agenda with the team to illustrate the day’s activities

Kaizen Blitz – Sample Agenda

• Introductions • Designate Roles (Parking Lot,

Timekeeper) • Develop Code of Conduct • Review VOC • Validate Customer

Requirements/Expectations • Create and review Current

State vs. Future State process maps

• Brainstorm solutions / identify opportunities for improvement

• Review Data Analysis • Create Action Plan

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The team leader should choose the appropriate tools that best suit the problem being addressed

Lean Tools

Do we use ALL the Lean tools? No - we pick and choose the most appropriate ones!

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Value Stream mapping is a tool used to show how activities, information, and “value” flow to the customer

Value Stream Map Example

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MUDA – Japanese word for waste [see APPENDIX “A” for TIMTWOOD examples of waste]

The 8 Deadly Wastes

T Transportation

I Inventory

M Motion

T Talent (Intellect)

W Waiting

O Overproduction

O Over-Processing

D Defects

Process Improvement – Identify and Eliminate the Waste

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• Unnecessary movement of things in the process increases risk of damage or loss

• Examples: – Unnecessary movement of paperwork and equipment – Often linked to poor office/work-site layout – Using Internal Mail / Fax to hand over work to colleagues – Moving supplies to warehouse that will later be sent to customer – Copying data from one system to another

Transportation

Process Improvement – Identify the Waste

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• Storing unneeded items for later use. • Inventory ties up money, uses valuable working space, and

increases the risk of obsolescence and/or damage • Examples:

– Extra brochures are printed ‘just in case’ we need them – Stationary is ordered annually and stored – Piles of ‘Work In Progress’ exist between process steps – Physical storage of completed documents – Multiple instances of data exist. If it needs to be updated, then needs to

be done in multiple locations

Inventory

Process Improvement – Identify the Waste

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• Unnecessary movement of people increasing time, frustration, and risk of injury

• Examples: – Inefficient office layout, work teams not co-located – Client files moved to storage while still being used – Only one copier on each floor – Searching for wrench in a work cell – Shuffling papers around the desk to find a form – Information that is keyed or captured is not used – Meetings, phone calls, emails, etc. are a result of miscommunication

Motion

” Process Improvement – Identify the Waste

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• A visual drawing of the actual Product, Paper , People, and / or Equipment work flow

• Use a spaghetti diagram to record transportation of goods and/or motion of people to find opportunities to eliminate waste

• For clarity, use a different line type, line color, or separate map for each object tracked

Motion – Spaghetti Diagram

Process Improvement – Identify the Waste

Source: GRS Crane field set up process

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• Underutilization of a worker's knowledge and talent • Being employed in the wrong position • Employee does not receive necessary training • Employee does not receive necessary equipment or tools • Underutilization of people’s skills and abilities • Examples:

– Overlooking or not knowing about expertise within the organization – Ignoring suggestions of co-workers in the process – Micromanaging people’s work

Talent

Process Improvement – Identify the Waste

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• Inability to perform work due to unavailable inputs from suppliers

• Examples: – Colleagues not able to perform work as system is down – Only one piece of equipment (fax) available for department –

often in use – Waiting (delays) for decisions before being able to continue work – Waiting on batch report to process payroll

Waiting

APPENDIX “A” Process Improvement – Identify the Waste

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• Producing more than is needed or required and producing earlier than required

• Overproduction ties up working capital and hides process and quality problems

• Examples: – Process produces defects, so output is increased to ensure we produce

enough quality items – Running or creating reports that are never used

Overproduction

Process Improvement – Identify the Waste

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• Too many steps in a process • Process steps that add no value to the process or make the

process harder than it needs to be • Examples:

– Repeat entries of the same information by different people – Information is requested/sent (email everyone when not required) – Performing work that goes beyond expressed specifications – Requiring multiple unnecessary reviews or approvals

Over-Processing

Process Improvement – Identify the Waste

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• Errors that result in a product or service that does not meet customer expectations. Defects include the waste of rework and correction.

• Examples: – Errors in process are allowed to move to the next process step without

finding preventive solution – Orders are checked 5 times before sent to the customer – All orders are 100% checked vs. sampled – Wrong forms used – Repair parts not to specification

Defects

Process Improvement – Identify the Waste

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• Remember TIMTWOOD • Provide an example of each type of waste in your business: T _____________________ I _____________________ M _____________________ T _____________________ W _____________________ O _____________________ O _____________________ D _____________________

Practice Exercise

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5s is a Lean tool used for workplace organization

The 5s process

5 Sustain

1 Sort

2 Set in Order

3 Shine

4 Standardize

A place for everything ~ AND everything in its place

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5s is a.k.a “5s plus 2” – Safety & Security

SET IN ORDER

SHINE

STANDARDIZE

SECURITY

SUSTAIN

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It’s all about Visual Management

COLOR CODING SYSTEM

STORAGE / PLACEMENT

ISLE MARKERS

Using Color As a Control Measure for Efficiency & Safety

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Carbon Monoxide Monitor

Garage door sensors

Gas Pump Cutoff Level

Poka Yoke is an error proofing method to improve processes

We See Examples of Poka Yoke Everday

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Tool shadow board Equipment box casing

Tool box casing

Shadow Boarding our work tools makes us and our processes better, faster, more efficient!

Inventory Control at a glance

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Why would we 5s our electronic folder structure?

“BEFORE” electronic document folder structure

So we can increase accuracy and efficiency

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“AFTER” applying 5s principles

2nd Drill Down By Month

1st Level Drill Down By Year

FINALLY 3rd Drill Down By Sub-Report Data

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Process Mapping

• Provides a visual sequence to the process activity steps • Identifies who is responsible for each activity step • Uncovers costly errors resulting in rework • Allows the team to designate activity steps as:

• value add (VA), • business value add (BVA) and • non-value add (NVA)

“We don’t know what we don’t know, and we won’t know until we map the out the process…” – Dr. Mikel Harry

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School of Operational Excellence All Rights Reserved

Copyright 2014 by NextEra Energy, Inc.

All activities in any process fall into one of the following categories:

Value-Add (VA) – No waste Value-add activities must meet all three criteria. They must: 1. Add form, features or function

to a product or service – physically change it

2. Be done right the first time AND

3. Be something the customer is willing to pay for

Business Value Add (BVA) – Waste we are willing or required to live with

Activities that are required for financial, legal, or other business reasons. Often called value enabling activities

Non-Value Add (NVA) – Pure waste Everything else!

Value-Added Activities

At least 75%-90% of activity in most processes is waste

What distinguishes Value-Add from Non-Value Add?

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School of Operational Excellence All Rights Reserved

Copyright 2014 by NextEra Energy, Inc.

Identifying NVA & VA (Waste)

Customer Need Business Need Waste

Value Added Value Enabling Non-Value Added

Current Process

Lean Process

Customer Need Business Need

Value Added Value Enabling WASTE

To lean out a process – identify waste and remove it!

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The Affinity Diagram (KJ Analysis)

Now let’s look at “why our process is having problems”? Let’s use the KJ Analysis…

Kawakita Jiro (inventor): 1. Identify what you are trying to

achieve 2. Team members write all ideas on

3" x 5" cards or Post-its 3. Key principle - everyone works

together in silence 4. After all ideas are exhausted

individuals then group similar ideas together • Members are allowed to

move post-its – even if it is someone’s idea else

5. Once team members stop adding or moving ideas into similar groups stop to discuss how to group them under header/categories

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EXAMPLE: Completed Affinity Diagram of a company’s exit interview process

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Fishbone a.k.a. Ishikawa diagram

• Uncovers potential root causes of a specific issue or failure within a process

• Identifies potential factors causing an overall effect

Root Cause Analysis – It’s all about the 5 “Whys”….

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• When it’s time to implement the solutions generated in the Kaizen Event

• Start with an Ideal State process map – Simply take the "Current State" functional map or VSM and

eliminate non-value adding events – Provides a benchmark of what could be possible and

encourages out-of-box thinking • Then create the proposed Future State process map

– Bridges the gulf between the current and ideal states – Incorporates the realities of technical limits, budgets and time – Documents how the solutions will be implemented in the new process

We found the root cause to our problem, now let’s create a Future State Map

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What activities take place after the Kaizen event?

Post Kaizen

The Action Plan created should include: • Specific Action items with detailed milestones • Identifies POC (point of contact) • Un-resolved action items • Target Due Dates • Final results • Actual Completion Dates • A structured communication plan:

• Schedule re-occurring meetings to track action items • Conduct 30/60/90 check–in with Project sponsor

Be sure to track the primary metric!

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Kaizen Team Final Presentation

• Tells the story about how the team progressed from the Define phase through to Improve – Usually delivered by the Kaizen team to leadership on the last day of the

event

• Informs the local management of workshop findings and solicits approval to proceed with implementation plans

• Formalizes expected results and clearly communicates ownership of open action items and result sustainment

• Provides the opportunity for management to publicly congratulate team members and express appreciation for their dedicated teamwork

Out Brief Team Participants and Sr. Management

This is a good time to obtain management approval to implement improvements

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Remember these two important points….

Improvements made today can always be improved upon tomorrow and failures are lessons learned

May the FORCE be with you and remember to…

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Q & A

OPEN FORUM