what to measure? lean initiative or outcome of lean strategy...lean initiative or outcome of lean...
TRANSCRIPT
8/29/2017
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What to Measure? Lean Initiative or
Outcome of Lean Strategy
with Jean Cunningham
Managing Times Press, 2003 Shingo Prize, 2004
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Productivity Press, 2007 Shingo Prize, 2008
Le
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Wiley Publishing, 2008
Building LEAN Beyond Manufacturing
© 2017 by Jean Cunningham Consulting All rights reserved
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Why Adopt Lean thinking? H
L H
Need to
justify Lean
Understands Lean as a way to achieve results
© 2017 by Jean Cunningham Consulting All rights reserved
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Lean Transformation Core Actions
Lean Transformation
Strategic Deployment
Value Stream
Management
Manage for Daily
Improvement (MDI)
Huddles Andon Boards Continuous Improvement Problem Solving
Kaizen Events
Flow: Cross-silo customer value
Active Daily Improvement (reduce waste)
Executive Responsibility, “True North”
Hoshin Kanri
Fixed Resources Break-even
Loss
Profit
© 2017 by Jean Cunningham Consulting All rights reserved
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Five Sources of Lean Financial Value
What are they?
How are they different?
© 2017 by Jean Cunningham Consulting All rights reserved
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Profit Model
Invested Capital • Fixed Assets • Inventory • Receivables
Fixed Resources Break-even Loss
Profit
Volume $
© 2017 by Jean Cunningham Consulting All rights reserved
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Profit Model
Invested Capital • Fixed Assets • Inventory • Receivables
Break-even Loss
Profit
Accelerated Profit
Volume $
© 2017 by Jean Cunningham Consulting All rights reserved
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Profit Model
1. Reduce Costs
Break-even Loss
Profit
Accelerated Profit
Volume $
© 2017 by Jean Cunningham Consulting All rights reserved
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Profit Model
2. Create Capacity
Break-even Loss
Profit
Potential Profit
Volume $
© 2017 by Jean Cunningham Consulting All rights reserved
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Profit Model
3. Increase Demand
Break-even Loss
Profit
Accelerated Profit
Volume $
© 2017 by Jean Cunningham Consulting All rights reserved
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Profit Model
4. Improve Contribution to Profit Margin
Break-even Loss
Profit
Accelerated Profit
Volume $
© 2017 by Jean Cunningham Consulting All rights reserved
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Contribution Margin
Revenue 10,000
Variable Costs 3,000
Contribution Margin 7,000
Margin % 70%
Contributors to Margin:
- Pricing
- Quantity of Materials
- Price of Materials
© 2017 by Jean Cunningham Consulting
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5. Improve capital structure…for all the accountants out there!
Invested Capital • Fixed Assets • Inventory • Receivables
Fixed Resources Break-even Loss
Profit
Volume $
Profit Model
© 2017 by Jean Cunningham Consulting All rights reserved
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Profit Model: with Traditional Outcome Linkage
Invested Capital • Fixed Assets • Inventory • Receivables
$
Fixed Resources Break-even
Profit
Volume
Sales
Operating Margin %
Working Capital
Return on Invested Capital
Loss
© 2017 by Jean Cunningham Consulting All rights reserved
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Check Out the Spreadsheet!
Give me your card if you would like it
© 2017 by Jean Cunningham Consulting All rights reserved
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Financial Impact Depends
• Commitment
• Investment
• Drive
• Senior leadership
• Current culture
• And so many more …
• Depth of the initiative(s)
• Breadth
• Speed of change
• Size of organization
• Financial situation
• Strategic focus
© 2017 by Jean Cunningham Consulting All rights reserved
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Experimenting, Actions and Learning
Process Performance Outcomes
• Safety: Customers, Employees, Visitors
• Quality: Performs, Right the First Time,
• Delivery: Reduce lead time for everything!
• Cost: Spending on value creation
• Employee stability
• Vendor performance
• Customer delight
• Better than last year
• Financial security
17 © 2017 by Jean Cunningham Consulting
All rights reserved
It is not about what to do.
It is about the environment you create for progress.
© 2017 by Jean Cunningham Consulting All rights reserved
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© 2017 by Jean Cunningham Consulting All rights reserved
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What does this mean for your organization?
© 2017 by Jean Cunningham Consulting All rights reserved
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Creating A Lean Culture
Support Change
Eliminate Waste
Optimize Information START
TODAY!
© 2017 by Jean Cunningham Consulting All rights reserved
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• JCC founder and president
• Lean Accounting, Lean Business Management, Lean Office pioneer
• Original Thought Leader for Lean Accounting, Lean IT, Lean HR Summits
• Lean accounting lecturer for The Ohio State University, Masters of Business Operations Excellence program
Building LEAN Beyond Manufacturing
• Former CFO:
Lantech, Inc. Marshfield Door Systems
Association of Manufacturing Excellence Stiles Associates
• Board member: Lean Enterprise Institute Lean Education Advancement Foundation
© 2017 by Jean Cunningham Consulting All rights reserved
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Contact
Jean Cunningham
Email: [email protected]
Phone: 224.688.3504
© 2017 by Jean Cunningham Consulting All rights reserved
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What to Measure? Lean Initiative or
Outcome of Lean Strategy
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