Efficiency: Systems

• Learning from the mistakes of others

• Developing sustainable efficiency• LEAN, JIT and Six Sigma – What’s

the point, anyway?

Process ImprovementThis is just like déjà vu all over again.--Yogi Berra

Lean: Improves EfficiencySix Sigma: Improves Effectiveness

Victory has a thousand fathers, but defeat is an orphan.--John F. Kennedy

The PeopleAt Toyota, we get brilliant results from average people managing a brilliant process, others get average results from brilliant people managing broken processes. - Toyota

3

Some “World is Flat” Quotes

• “There are two ways to flatten the world…use your imagination to bring everyone up or …to bring everyone down, to the same level”

• “There is one thing…that can never be commoditized-and that is imagination”

• “One thing tells me that an ‘organization’ is in trouble is when they tell me how good they were in the past” (Hammer)

.

Superior Producers

Top 16%

PoorProducers

Bottom 16%

Average Producers

68%

What have we learned?

• Job Fit matters.• Managers should spend

half their time with top performers

• Money isn’t #1 • Applying motivation in an

individual way helps• Retention of all employees

isn’t always desirable

Top Threats to Success According to the C-Suite

• Competition • Health of the Global Economy• Inability to Attract and Retain

the Best Talent• Inability to Develop New

Products/Services

SOURCE: Accenture

Pay attention to the language

Assure seamless information flowImplement integrated product and

process development Ensure process capability and maturationMaintain challenges to existing processesIdentify and optimize enterprise flowMaintain stability in changing

environment

Historic Process Practices

ISO 9000

TQMBPR

Promote leadership at all levelsRelationships based on mutual trust

and commitmentMake decisions at lowest appropriate

levelOptimize capability and utilization of

peopleContinuous focus on the customerNurture a learning environment

Lean Thinking

Pay attention to the language

Simple Lean definition:

1. Eliminate waste and non-value-added activity (NVA)

2. Have respect for people

“Value added" happens if:

• The customer must be willing to pay for the activity.

• It changes the product or service, making it closer to the end result that the customer wants.

• It must be done right the first time.

It means you hold people accountable to the system,

following it and improving it (the notion of “kaizen" or continuous

improvement).

"Respect for people" is much harder to define.

Key Point:

• “Lean” organizations reward and retain top performers by aligning the organization with their personal values and achieving job fit.

Total Quality Management

Reengineering TraditionalSix Sigma

Lean

Focus Product Quality Business Processes

All Sources of Product Variation

All Enterprise Processes & People

Change Process

Incremental Radical Process-specific; continuous

Evolutionary Systemic

Bus. Model

Improve Efficiency & Shareholder Value

Increase Enterprise Performance & Customer Value

Minimize Waste & Increase Customer Satisfaction

Deliver Value to All Stakeholders

Where Lean fits in…

Are you comfortable?

• Lean can create a high performing environment

• Lean requires strategic HR• Lean aligns with high performance people

• Lean requires rethinking “status quo”

Key points:

•“Lean” organizations reward and retain top performers.

•Lean applies anywhere.

Efficiency• Any production method relies on efficiency –

this can be viewed in different ways:• Productivity – a measurement of output per

unit of the factor used (labour, capital or land) Total Output

Productivity = ------------------- Units of Factor

• Technical Efficiency – output produced using the fewest possible inputs

• Productive Efficiency – output produced at the lowest possible cost

What is Waste?• Consuming more resources than

are necessary to produce the service that the customer wants

• Pure Waste: Actions that could be stopped without affecting the customer

• Incidental Waste: Actions that need to be done based on how the current system operates but do not add value

Pure Waste

IncidentalWasteValue

The Simple Part …

Being Able to See IT!

The Real Challenge …

Knowing how to properlyremove it!

Types of Waste

Over ProductionInventoryWaitingTransportationMotionOver ProcessingQuality / DefectsPeople’s Skills

• Overproduction - Supplying the process with more than is needed to meet order requirements, sooner and faster than it is needed, causes almost all other types of waste

• Inventory – Raw materials, work-in-progress, finished goods; extra inventory is used to hide other wastes

Inventory Hides Waste

Sea of Inventory

Long Transportation

CommunicationProblems

MachineDowntime

EmployeeAvailability

Poor Scheduling

QualityProblems

Re-work

LongSetups

Supplierissues

HouseKeeping

EmployeeAvailability

Finished Goods

Raw Materials

Waiting Watching others work, waiting for supplies, instructions, approval, information, maintenance or decisions

Transportation Double or triple handling, moving in and out of storage areas and warehouses, poor layouts, poor housekeeping

Motion Walking without working; searching for tools, materials or information; reaching, bending or unnecessary motion due to poor housekeeping or workplace layout

Process Repair or rework steps, extra setup steps, over-specification of the process, extra work steps

Defects Defective or scrap materials, low yield, incorrect schedules, work plans or information

People’s Skills A source of labor only, not seen as true process experts; do not involve in finding solutions

Production Methods

Copyright: Photolibrary Group

Whilst all output can be classed as production, different production methods may be more appropriate for different products or services.

Landscape work tends to be very project intensive – efficiency could be measured in terms of output per worker

Production Methods

• Job Production – One-off production - each item might have particular specifications

• Flow Production – suitable for mass market products that are identical

• Batch Production – each stage of the production process has an operation completed on it before moving on to the next stage – allows modifications to be made to products that otherwise are the same

Production Methods

Which is more efficient?

Operation 1 2 3 4 5

6

7

891011Finished Product

This?

Production Methods

Operation 1

1a 1b 1c 1d

2a 2b 2c

3a 3b 3c 3d

4 Finished product

Or this?

Production Methods

Or this?

Cell 1 Cell 2 Cell 3

Finished Product Finished ProductFinished Product

Production Methods

• Answer – it could be any of them!• The design of the production space

can influence:– Output levels– Factor use– Efficiency– Cost levels– Quality assurance procedures

Kaizen (Continuous Improvement)

Kaizen (Continuous Improvement)

• Japanese concept – not made redundant by the decline of the Japanese economy which may be due to other institutional factors!

• Focus on gradual and continuous improvement

• A whole business philosophy• Importance of EVERYONE buying into

the concept and the vision

LEAN is Just-in-Time

• JIT philosophy means getting the right quantity of goods at the right place and the right time

• JIT exceeds the concept of inventory reduction

• JIT is an all-encompassing philosophy found on eliminating waste

• Waste is anything that does not add value• A broad JIT view is one that encompasses

the entire organization

The Philosophy of JIT• All waste must be eliminated- non value

items• Broad view that entire organization must

focus on the same goal - serving customers• JIT is built on simplicity- the simpler the

better• Focuses on improving every operation-

Continuous improvement - Kaizen• Visibility – all problems must be visible to

be identified and solved• Flexibility to produce different

models/features

Three Elements of JIT

Three Elements of JIT - continued

• JIT manufacturing focuses on production system to achieve value-added manufacturing

• TQM is an integrated effort designed to improve quality performance at every level

• Respect for people rests on the philosophy that human resources are an essential part of JIT philosophy

Elements of JIT Manufacturing

• JIT Manufacturing is a philosophy of value-added manufacturing

• Achieved by– Inventory reduction - exposes problems– Kanbans & pull production systems– Small lots & quick setups– Uniform plant loading– Flexible resources– Efficient facility layouts

Role of Inventory Reduction

• Inventory = Lead Time (less is better)• Inventory hides problems

Push Production Systems

• Most Nurseries are “Push”• Grow inventories– production decisions are based

on forecasts of demand– generally not compatible with

JIT

Pull Production Systems

• Most Landscaping is “Pull”• Make to order • work is triggered by order

from external customer, or “internal” customer (e.g. last station in line)

• generally compatible with JIT

Push & Pull Supply Chains

• Just as individual firms can implement push or pull operations, entire supply chains can be– Push– Pull– Push-Pull Hybrid

• Some components are push, others pull

Small Lot Sizes & Quick Setups

• Small lots mean less average inventory and shorten manufacturing lead time

• Small lots with shorter setup times increase flexibility to respond to demand changes

• Strive for single digit setups- < 10 minutes• Setup reduction process is well-documented

– External tasks- do as much preparation while present job is still running

– Internal tasks- simplify, eliminate, shorten steps involved with location, clamping, & adjustments

• Ultimate goal is single unit lot sizes

Flexible Resources• Moveable, general purpose

equipment:– Portable equipment with plug in power/air– E.g.: drills, lathes, printer-fax-copiers, etc.– Capable of being setup to do many different

things with minimal setup time

• Multifunctional workers: – Workers assume considerable responsibility– Cross-trained to perform several different

duties– Trained to also be problem solvers

JIT and TQM- Partners

• Build quality into all processes• Focus on continuous improvement -

Kaizen• Quality at the source- sequential

inspection• Jidoka (authority to stop line)• Poka-yoke (fail-safe all processes)• Preventive maintenance- scheduled• Work environment- everything in its

place, a place for everything

Respect for People: The Role of Employees

• Genuine and meaningful respect for associates

• Willingness to develop cross-functional skills

• Actively engage in problem-solving (quality circles)

• Everyone is empowered• Everyone is responsible for quality:

understand both internal and external customer needs

Respect for People: The Role of Employees

• Associates gather performance data• Team approaches used for problem-

solving• Decisions made from bottom-up• Everyone is responsible for preventive

maintenance

The Role of Management

• Responsible for culture of mutual trust

• Serve as coaches & facilitators• Support culture with appropriate

incentive system including non-monetary

• Responsible for developing workers• Provide multi-functional training• Facilitate teamwork

Supplier Relationships and JIT

• Use single-source suppliers when possible

• Build long-term relationships

• Work together to certify processes

• Co-locate facilities to reduce transport if possible

• Share cost & other information

• Early involvement during new product designs

Benefits of JIT

• Reduction in inventories• Improved quality • Shorter lead times• Lower production costs• Increased productivity• Increased machine utilization• Greater flexibility

Implementing JIT• Starts with a company shared vision of

where it is and where it wants to go• Management needs to create the right

atmosphere• Implementation needs a designated

“Champion”• Implement the sequence of following steps

– Make quality improvements– Reorganize workplace – Reduce setup times

Implementing JIT - continued

– Reduce lot sizes & lead times – Implement layout changes

• Cellular manufacturing & close proximity– Switch to pull production– Develop relationship with suppliers

JIT in Landscape• Most of the JIT concepts apply equally to

Service companies– Improved quality such as timeliness, service

consistency, and courtesy– Uniform facility loading to provide better

service responsiveness– Use of multifunction workers– Reduction in cycle time– Minimizing setup times and parallel

processing– Workplace organization

JIT across the organization

• JIT eliminates organizational barriers and improves communications– Accounting changes or relies on activity-

based costing– Marketing by interfacing with the customers– Finance approves and evaluates financial

investments– Information systems create the network of

information necessary for JIT to function

How Will Lean Help Us?• Reduce Lead Time to our

customers by eliminating waste from our system

• See things differently than we do today

• Optimally utilize resources while meeting our customer’s needs

• Enhance our process flow• Improve quality and lower costs

1. Specify Value for Our Customer(s)

• Providing the right product, at the right time, in the right quantity, at the right quality, at the right price, in the right place in accordance to the customers requirements

• Usually value added steps lead to a transformation of the material from one form to another which gets the product closer to the customer’s specifications

A value stream is all of the value-adding activity AND all of the non-value adding activity (pure waste and incidental waste) required to provide a product/service to a customer

2. Map the Flow of Value in Our Cell

Process A Process B Process CRawMaterial

CustomerFinished Product

Value Stream

5. Seek Perfection

PDCA

Lean Tools

Hoshin PlanA planning tool that helps us identify the key focus points and strategies we will use to steer us towards our vision.

• Enables everyone to ‘see’ where we’re going and our plans to get there

• Build plan and strategies as a team

• Shared responsibility for getting results

VisionKey Result AreasKey Result MeasuresKey Strategies

5SFocuses on effective workplace organization and standardization it allows us to easily spot variation from standard operating conditions.

• Cleaner, safer work environment

• Organized, user friendly workstations

• Open up space and reduce clutter

Workforce FlexibilityThe ability of the workforce to “flex” to other jobs as demand fluctuates within the system, and the efforts the organization undertakes to ensure this occurs.

• Improve worker skill set • Maximize organizational

flexibility• Focused training and

development plans• Allow the ability to flex to

our customer’s demands

Standardized WorkA step-by-step description of work activity used every time by everyone to safely complete a task based on best known practices.

• Operators involved in determining best practices

• Minimizes and highlights process variability

• Everyone learns best practice

1

3

2

4

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Proper PPE

Standard Work Sheet

KanbanA visual system that easily communicates the need for parts to be either replenished or consumed. Designed to improve material flow and control inventory levels.

• Workers produce product based on actual usage

• Minimizes inventory by tying production to consumption

X X X(make one move one)

Zero Defect QualityThe principle that defects are prevented by controlling the performance of a process so that it cannot produce defects through mistake proofing and failsafe methods.

• Improved quality and customer satisfaction

• Solutions at the source – employees aid in problem solving and in developing creative, more effective corrective actions

KaizenA system involving every employee that is based on making little changes on a regular basis, anywhere changes can be made.

• Continuous small improvements

• Changes are implemented quickly

• Everyone gets involved

Value-Added Activities Transforms or shapes material or information Customer wants it Done right the first time

Incidental Waste No value created but required by current technology No value created but required by current thinking No value created but required by process limitations No value created but required by current process

Pure Waste Consume resources but creates no value for the customer Could be stopped and it would be invisible to the customer

Value Defined

Resource distribution

Opportunity for improvement by reducing waste and creating additional value

Opportunity for improvement by reducing waste and creating additional value

Lean Emphasis

Value WasteInitialProcess

Value WasteGeneralProcessReduction

Waste and Value Both Decrease

Waste Only Reduction

Value WasteTarget & Reduce Waste Maintain Value

Value MaintainedResources Decrease

ValueCreation

Value WasteApply Resources to Create More Value

Value IncreasedResources Focused

How Do We Succeed with Lean?• As a team – open minded, supportive• Understand the concepts and accept all

aspects of the lean process, including those that may cause undesirable effect in the short term

• Aligned focus from the top to the bottom

• Effectively use lean methodologies• Carefully plan implementation to

remove waste• Allocate the proper resources• Becoming truly lean is a journey and

will not be made without some discomfort

Expected Lean ResultsCostsDefects (99%)Inventory (10 fold)Lead Time (90%)Machine DowntimeSpace (50%)

Capacity Customer ResponsivenessEfficiencyEmployee SatisfactionFlexibility – Demand Flux

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Small Steps and Continuous Improvement

• “The hallmark of a truly successful organization is its willingness to abandon what made it successful and to start fresh” (Hammer)

• Empowering “innovation”• Routine vs. Process

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Why is Six Sigma accuracy important?

Because at 99% accuracy (4 Sigma):

• Two short or long landings at major airports each day

• 5,000 incorrect surgical procedures every week

• 20,000 lost articles of mail per hour

• No electricity for almost 7 hours each month

• At least 200,000 wrong drug prescriptions each year

• 50 dropped newborn babies each daySource: American Society for Quality

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Lean Six Sigma: Two Complementary Approaches

Six Sigma…

• Emphasizes need to recognize opportunities and eliminate defects

• Recognizes that variation hinders ability to reliably deliver high-quality services

• Requires data-driven decisions and incorporates a comprehensive set of standard tools for effective problem solving

Lean…

• Focuses on maximizing process velocity

• Provides tools for analyzing process flow and delay times at each activity in process

• Removes non-value added steps in process

• Provides a means for quantifying and eliminating the cost of complexity

Attitude is Critical

“If you think you can or you think you can’t. You’re Right.”

Henry Ford

Six Thinking Hats®

1. Background2. Purpose 3. Six Thinking Hats4. Exercise

Outlines

Background

“Wear” one hat at a time when considering a problem.

Everyone wears the same color hat at the same time.

Look at problem from the same perspective.

Purpose

Power Time Saving Removal of Ego One Thing at a Time

White Hat

Facts, Figures and Information

What information do we have ?

What information is missing ?

What information do we need ?

How are going to get the information we need ?

What questions do we need to ask ?

CHECKEDFACT

UNCHECKEDFACT

Two Tiers

Computer does not have emotions.

Pump out the Figures, Facts and Information.

Emotions

FeelingsIntuitionHunchesAffection

Sentiment情感

感觉

情绪

感想

“Exact opposite of White Hat thinking, which is neutral, objective and free of emotional flavour.”

Edward de Bono

Black Hat

CarefulJudgemen

t

CautiousLogical

Risk Assessment

Critical

Black Hat

Black Hat thinking is concerned with caution and careful.

We need to consider risks, dangers, obstacles, potential problems and downside of a suggestion

Black Hat

You should think like him !

Yellow Hat

Yellow Hat

“Exact opposite of Black Hat thinking, which is careful, critical and fill with judgement.”

Yellow Hat

Do you expect to find fish here ?

Green Hat

Green Hat

“The Green Hat Thinking is concerned with New ideasand New ways of looking at things.”

Blue Hat

a. Organisation of thinking

b. Control of the other hats

Blue Hat

“Blue Hat Thinker is responsible for summaries, overviews and conclusions.”

“Blue Hat Thinker monitors the thinking and ensures that the rules of the game are

observed.”

Blue Hat

You are the referee.

References