How to Drive Lean Behavior with Visual Performance Analytics
Today's market forces are sweeping away market
and industry structures that have historically defined competition. In response, many organizations are rapidly adopting or evolving their Six-Sigma, Lean Manufacturing, Total Productive Maintenance and other operational excellence programs out of survival. Soon these programs will no longer be a competitive factor in of themselves. What is most important today, is how well organizations implement and execute their programs so that their strategies are driven down into operational execution with discipline and predictability.
Table of Contents
• • • CEO Letter …..………………………….………………………... 4 Executive Summary …………………………………………. 5 Introduction ……………………………….……………………. 7
• • • • • • • • •
Rising to meet the challenge …….……………………………….……. 8 Missing the “why” and the “how” of TPS ….……………………... 9 The Measurement Paradox ……………………………………………… 10
11 Cannot operate as business as usual …………………………….. 12 Evolving Lean culture with new methods ….…………………... 13
Guiding principles of visual performance analysis . ………… Lean Promotion Offices are often disconnected ..…………... 14 Information Latency ………………………………………………………... 16 Information Integrity and Fidelity .………………………………….. 17
•
Visualize new methods to enable Lean …....……. 18
• • • • •
Driving performance = driving change ……………………….…….. 19 Understand what you have, what you need …………….…….. 20 Building momentum for new methods .………………………… 22 Enabling Lean behavior by visual performance controls …. 22 Gaining the advantage …………………………………………………….. 24
•
Closing thoughts ………………………………..…....……. 26
March 19, 2009
This is an extremely energizing prospect for leaders, You have a remarkable opportunity to increase your leverage of the Lean’s principles and tools as instrumentation within your grasp to enhance your competitive posture in these times of challenge and change.
I look forward to the near future to further our conversations about what a Lean Enterprise and a Lean Supply Chain will look like.
Best Regards,
Thomas DeForge Chief Executive Officer Lean Value Solution International 12 A Pasco Drive East Windsor, CT 06088 Phone: 8860-370-9657 Ext. 11 TomDeforge@LVSILLC.com
Executive Summary
A New Model for Lean Transformation
The first change in a Lean transformation is the infusion of Lean thinking into the corporate strategy. The strategy will outline a corporate vision and a set of goals for the business. Lean transformation begins by aligning corporate strategy with Lean management principles. Strategy design and planning becomes guided by customer value, lead time reduction, quality and other elements of Lean. The success of the new corporate strategy rests on three pillars: • Cultural adoption • Process change • Execution The single biggest roadblock to achieving Lean success in most organizations has been adoption by the workforce. Changing the paradigm of an organization has to be the top priority of a transformational effort. If the workforce does not change the their mindsets, they will not change their behavior and Lean transformation will fail. Next, process change is at the center of enabling business strategy. This is true whether the vision is to become more customer focused, improve time to market, or become the lowest cost provider in an industry. Mapping the strategy to the proper process changes is a key part of the transformation effort. Finally, even a brilliant strategy can be undone by flawed execution. There has to be rich communication, alignment between desired actions, measurements systems and rewards, a firm grounding in facts, and outstanding project management in order to turn strategic plans into reality and ultimately higher sustained profitability.
Visual performance analytics help enables and directly supports the execution of strategy by enabling the three pillars, cultural adoption process change and execution. Visual controls are key in enabler to communication of strategy and how to measure its effectiveness and the effectiveness of cultural change management. The messages and measures that are displayed serve to inform the workforce and help them understand on a daily basis what activities and metrics are important to the business and align their behavior with those new measures. Having visual performance analytics also facilitate setting the proper expectations about performance which drives behavior and the establishment of new cultural norms. Involving the workforce to actively participate in capturing inefficiencies such as process stoppages, quality issues and other process disruptions will drive a culture of accountability and ownership. Having a workforce that has the capability to quickly capture root cause issues affecting the efficiency of the process will provide for actionable intelligence which will allow for automated analysis and uncovering the real problems affecting the organization and not the symptoms. The information provided by operational analytics is important in guiding process change. The analytical tools within all continuous improvement methodologies are data driven. By default the data must have integrity and fidelity. For example, cell balancing depends upon accurate (and consistent) cycle times for each operation. Proper preventive maintenance scheduling relies on mean time between failure and mean time to repair information. Value stream mapping requires not only accurate cycle times for the operations, but a clear picture of what is happening between operation steps. Many times the information used in these tools is acquired through tribal knowledge or from 1-2 days of physical observation and is highly- flawed because of the short-comings of sampling and the “Hawthorne effect” and other issues. Improving the accuracy and timeliness of the data improves the quality of the resulting process. The impact of visual performance analytics on execution is even more transparent. As mentioned above, execution depends upon rich communication, alignment between desired actions, rewards systems and measurements are rooted in a firm grounding in facts. The use of visual performance analytics and visual controls allows information capture at the source and then aggregating and organizing the information so that the “right” action can be taken to drive the “right” results.
Introduction
This briefing explores the leverage of using visual performance analytics complemented with an effective application of Lean principles to significantly improve the communication and decision-making process of Lean Promotional offices (LPO) and enhance communications with distributed manufacturing centers and stakeholders. Consequently, the introduction of visual performance analytics , a solid mindset of Lean thinking and acting Lean should lead to better process controls and influence Lean behavior and organizational culture. The basis for this briefing was performed over the past four years at multiple manufacturing operations in the aerospace and defense, industrial components, food and beverage and consumer package goods industries. This briefing covers the technical, cultural, and leadership aspects of attempting to drive change in organizations of diverse sizes, cultures and varying levels of Lean maturity.
Rising to Meet the Challenge
In most organizations today, significant opportunities exists to improve operational performance. Many opportunities exists because of the lack of standardized communication, information reporting and overall visibility into processes. A strong argument can be made that the lack of visual process controls play a key factor impacting operational performance. This simple fact is causing many management teams to reassess current process and operational performance management tools. The Toyota Production System (TPS) provides an integrated business management system with guiding principles, methodologies and tools and techniques to identify and drive waste out of any process. The concept of TPS is very straight forward: 1. 2. 3. 4. 5. Discover areas of waste Prioritize these areas Develop a plan to reduce the waste Implement a sustainable solution On-going monitoring of the performance of the process
A set of tools and techniques are always limited if not combined with a set of principles that provide guidance and direction. Many have praised the Toyota Production System, its 14 Management Principles and the tools and techniques. The fact remains that only a very small number of companies have even come close to reaching Toyota's level of speed, quality and efficiency. The missing ingredient to duplicating Toyota's success is actively practicing the set of principles that guide Toyota's strategy, culture, processes and its execution. It seems that everyone want to be like Toyota, however, nobody wants to act like Toyota on a-day-to-day basis. Consequently, the basis of this briefing is the implementation of visual performance analytics as a tool and as an enabler that when complemented with Lean principles as the guiding force can propel organizations on a path to achieving operational excellence.
Missing the “why” and the “how” of TPS
Within most organizations today that have strong continuous improvement programs; employees are already well versed in the set of tools and techniques preached by Lean and Six Sigma. However, there was no real understanding of "why" a certain tool makes sense nor "how" it is supposed to help. In most cases, measuring a specific improvement implementation is monitored for only a short period of time. It seems that a large number of continuous improvement specialist are applying the various techniques simply because senior management mandates it. Bridging the gap between the “why” and the “how” is best achieved by educating stakeholders to the larger context and theme of searching for new methods to enhance a processes effectiveness. Leveraging visual performance analytics to accurately assess the “real” performance of processes can drive breakthrough dialogue that help stakeholders to better understand the disconnects in the "why" and "how.“ Eliminating this disconnect will help organizations to more effectively drive strategy down into execution with discipline and predictability. As organizations continue to use technology to advance their products and services so to organizations should seek to leverage enabling technologies to advance superior processes through better decision making. The underlying use of enabling technology is to promote Lean thinking and its behavior to achieve the desired cultural norm. To reassert the notion of this briefing again, enabling technologies complemented with a mindset of Lean principles can help companies better compete in their marketplaces.
The Measurement Paradox
We can’t improve what we don’t measure… We don’t know what we don’t know… We can’t act on what we don’t know... We won’t know until we search…
We won’t search for what we don’t question…
We don’t question what we don’t measure…
Guiding principles of visual performance analytics
Visual performance analytics are based on achieving a highly automated and effective method for capturing operational data. Most importantly, what is impacting processes negatively? The goal is to convert what is happening or not happening and quickly synthesize actionable information into action. When considering leveraging visual analytics to improve decision making a few key guiding principles are advised: • All stakeholders have direct and instantaneous access to data • Goal is to analyzing data and understanding its implications • Managers must focus on improving their processes
• Data collection and decision making are:
• Highly automated • Highly integrated
• Hypothesis are quickly analyzed and tested without manual effort
• Analyses should synthesize information from many sources • Information is shared between stakeholders routinely • Data should have a high degree of integrity and fidelity
Business as usual is no longer an option
Companies can no longer operate as business as usual, competitive equilibrium is always a factor and cannot be overlooked. Over time, most companies eventually tend to offer similar products and services and use the same methodologies and technologies to improve their business processes. Differentiation among companies becomes very difficult to sustain. Consequently, the basis for competition include "efficient and effective execution, smart decision making, and the ability to wring every last drop of the value from business processes - all of which can be gained through a practical application of visual performance analytics and a strong practice of Lean. In order to know what data should be collected to drive visual analytics it is important to determine which operational performance metrics or key indicators are most relevant to the process. In order for a performance metric to be effective is must be: • Measured • Relevant • Manageable • Drive reward systems
Evolving Lean culture with new methods
It is best practice to have continuous education as a method to shape culture and make continued improvements on processes. It is no different when it comes to technical training, unfortunately, when it comes to software technology training, it is seen by many as cumbersome and boring, resulting in the audience grasping very little of the information. In fact, most software programs are leveraged to only a fraction of their capabilities. Most industry estimates gauge that most any software application is used to only about 10 percent of their potential. This is because most training is usually a “one-and-done” exercise, repetition in training is essential to mastering any skill, including Lean. The most effective education is through a series of training workshops that leverage “real world” problems and the tools to fix the problems. The format of training is an important aspect; most group training sessions focus on leveraging visual performance analytics to drive a Lean technique or tool and ”why” as well as the “how” to use the tool effectively. Also very important to driving sustainability; is the “how” to measure a process to make sure that the process improvement in fact impacts key performance metrics. Just as it is important to educate a group on leveraging visual performance analytics to improve the entire process, it is as valuable to provide a series of one-on-one training sessions that enhances individual decision making capabilities. This leverages the “the sum of the parts are greater than the whole” notion.
Lean Promotion Offices are often disconnected
The need for adapting visual performance analytics with Lean is based on several factors; many stakeholders are involve and impact processes while most have slightly different measurements and objectives. While this is true for most organizations, ultimately, the objective is the same, improve speed, cost, quality and safety constantly. Consequently, most LPOs are tasked to reduce waste in their production processes. To effectively achieve this, LPOs and production staffs have to work together to reduce waste and improve the efficiency in their current production processes. This is often a challenge because most LPOs do not have visibility and the proper understanding of the manufacturing process. Information usually is negatively impacted by latency and often lacks integrity. Those effects can be summarized as: • Increased costs due to data gathering and reporting: Additional resources required for data gathering and reporting. Some manufacturing centers have dedicated full-time resources for report generation while other make report generation part of the many functions. • Issues are discovered later in the process: With the latency's impact of most reporting systems, the damage has already taken place before anyone even notices. Since the information is not accurate nor time sensitive, most workforces do not act responsively. Thus, all the performance metrics reported aren't being utilized properly or for the intended purposes of measuring the health of the process and driving behavior. • Increased tension among stakeholders: Given the variability affecting the process, both upstream and downstream processes are at risk of overproducing or under producing. Consequently, the wrong amount of inventory is not available to achieve flow. Often this causes situations for unnecessary and avoidable constraints on the process which further creates inaccurate capacity planning projections. This creates a vicious cycle of self-induced waste into the process.
• Shotgun approach to improvement projects:
Given that there are commonly issues due to data integrity, generally there is pushback regarding with projects focused on analyzing variability within a process. Thus, the majority of the projects used one’s “experience” and not actual data, the “facts” to solving issues. Although experience has its merits, the fact that the Overall Equipment Effectiveness (OEE) of most process are unknown. Measuring current performance to existing production standards (standard times or standard rates) for each operation of a part number is daunting. When organizations actually measure the accuracy of standard times or rates against the actual production times of a part number or SKU, they are surprised to find that about 30% were significantly inaccurate by 30% to 40% off standard.
• Delaying critical decisions making: Since the facts are not consistent from one group to another, it commonly results in delaying critical decision making. Many organizations face communication issues that stem from avoidable misunderstandings that were often perceived as dishonesty or incompetence. Regardless, communication among stakeholders are strained when one feels that some groups were not disclosing all the facts affecting their performance or the process is just broken.
Information Latency
Progressive LPOs often hold meetings with the various manufacturing stakeholders on a weekly basis. This includes line supervisors to executive management. Typically, manufacturing work centers would report production and process issues to the LPO as well as open the discussion with the other work centers regarding potential upcoming risks in their work centers, cells or production lines. Each work center does not have adequate visibility into their processes nor that of other work centers upstream or downstream. Thus, each work center could cannot gauge the potential risks and opportunities stemming from other operations beyond their own.
The process of just gathering basic gathering can be at best described as a manually intensive process that required each work center to dedicate approximately 10% - 15% of their time to data gathering. The majority of meetings are presenting “data” with less than 5% of the time actually spent on analyzing and identifying production risks and opportunities. At the very least, these proportions should be reversed. Significant opportunities exists in most companies to reduce the time gathering data and more time analyzing and understanding of their risk and opportunities by improving the quality of decision making.
Information Integrity and Fidelity
Even the most progressive LPOs lack consistency for report generation, and many times during their meetings, time is spent reconciling data and good old fashion arguing. Unfortunately, this happens all too often and create conflicting realities, which orders are on-time and which orders that are late. As it turns out, both realities are right, but different because of the time periods in which the data was generated, and even to what system they used to find the data. Some systems are updated daily whereas other systems are updated weekly. This creates inherent issues and conflicts that prevent getting a single version of the truth at all levels. Unfortunately, the real cost is often hidden to organizations and the impacts are far greater to profitability and performance than they realize. One must factor the costs of: • Expediting premiums from suppliers • Expediting fees from carries • Lost business due to poor delivery performance • Unnecessary overtime due to infeasible production plans We have not even started to touch the waste in poor processes due to the lack of visibility into the process and the impacts on sub optimizing the Lean tools. When looking at the broad picture, it becomes apparent that one of the major areas for the enterprise to reduce waste is to improve the communication link between their LPOs and the manufacturing work centers and stakeholders. Three questions need to be addressed:
1. Can the introduction of visual performance analytics and controls help the overall communication between the LPO and the manufacturing work centers? Will the enhanced communication, ultimately eliminate the various wastes and improve production processes and profitability performance?
2.
3.
Additionally, can visual performance analytics enable Lean culture and drive Lean behavior across the manufacturing value chain?
Visualize new methods to enable Lean
Given all the undesirable effects caused by information latency, data integrity and miscommunication among stakeholders, there is often no method to obtain an accurate representation of a process’s health. Thus, it seems that the use of visual performance analytics might be a practical solution that would have several benefits to an organization. It is also possible to drive acceleration in Lean behavior to through the LPO, particularly the LPO's interaction with the manufacturing work centers and stakeholders. Additionally, it is also possible to show the manufacturing work centers several performance metrics that would help the entire process and identify risks and opportunities with actionable intelligence. The benefits of an automated, fully integrated, real-time visual performance analytics system can provide an accurate representation of the health of a process as well as drive Lean behavior onto the shop floor and into management meetings at all levels. Even the most savvy Lean practitioners; Deming (2000) said "Break down barriers between departments (Deming, 2000)." Real time visual performance analytics will attempt to break down the barriers between the LPO and the manufacturing work centers and stakeholders. Why stop there; the opportunity exists for most organizations to break down barriers between their value chain partners.
Driving performance = driving change
Often moving the performance needle requires change to occur. This means that a team is available and committed to the change process. This team should be charged with the task to implement a more robust method for assessing the health of the processes and enhancing the data that drives the Lean methodology and tools. It is critical that senior management declare their support for the project and the team in particular. Getting buy-in from the "top“ is often easier than at other levels of the organization. It is common to find resistance from the manufacturing work centers, particularly the supervisors and cell leads. The cell leads have a unique situation to than other stakeholders. On one hand they must execute the initiatives of management and on the other hand they must balance the initiatives that are sometimes perceived as “big brother” with the realities and personalities in their cells or lines. Cell leaders are often the buffer and sometimes the glue between management and the operators. Consistently, stakeholders at all levels are concern about the lack of time to learn a new tool or process and the impact on their day-to-day processes. It is important to focus on prioritizing the list of objectives to ensure that project yields results sooner than later. By communicating the list of immediate objectives to the various stakeholders, it became relatively easier to focus on the deliverables and managing expectations. The main goal of implementing a visual performance analytics capability is to help both the LPO and the manufacturing work centers perform better in their daily activities. In other words: • Everyone working off the same version of the truth • Drive Lean behavior and build awareness of Lean • Identify bottlenecks in the manufacturing value chain
• Identify risks before they become major crises
• Identify short-term opportunities to reduce waste • Identify long-term opportunities to reduce waste
• Build an engaging Lean environment for all employees
Understand what you have, what you need
Most organizational IT infrastructures can be described as a mix of enterprise-wide applications and stand-alone applications developed for a particular business unit. It is common to find centralized manufacturing applications referred to as "Shop Floor Data Collection systems” (SFDM) or sometimes called “Supervisory Systems.” SFDM is used primarily for collecting data and is available instantaneously. The system is used for both collecting and reporting of data. However, the reporting functionality is relatively limited and is at best described as reporting data of one metric for a single item per screen. There usually exist a Manufacturing Resource Planning systems (MRP). Commonly you will find SAP, Oracle, Infor and a host of other providers and home grown systems. These system attempt to coordinate purchasing, engineering and production so that orders are delivered when the customer expects them. While this is the goal, it does not happen enough. The budget (financial) data exists across multiple systems. The financial and the majority of an organization’s information is kept in their Enterprise Resource Planning systems (ERP). ERP systems are the transaction backbone for companies as well as the system of record. ERP systems can effectively tell you what you have done, what you are currently doing, however, they are very ineffective at telling you what you will happen next week. This is primarily due to the disconnects with operational systems and the disconnected planning processes. Common in most organizations, management is accustomed to obtaining reports in some type of Microsoft Office format including Excel reports, Access reports or PowerPoint reports. There are also several other applications Cognos, Hyperion , Business Objects and other business intelligence systems. LPOs are accustomed to getting their data through a plethora of Microsoft Excel and Access reports. Each manufacturing work center compiles its own report. There are usually no consistent method for reporting the data or using a consistent data source. This often results in many scenarios where LPO struggle with data integrity and latency which mean that they work with manufacturing work centers to reconcile inconsistent data. In addition, since data exists across multiple systems, it is a manually intensive process that attempt to compile an aggregated view of a singular truth. Ultimately, most LPOs can not use a datadriven approach to decision making and had to rely on anecdotal data, which has the potential to lead to several undesirable effects described earlier.
Visual performance analytics is an IT enabler for Lean principles. The solution attempts to tap into the many legacy systems available at an organization and collect one aggregate view. Furthermore, these systems provide a customized reporting methodology by leveraging the concept of visual dashboards to convert data into critical information used for realtime decision making. These systems have proven very helpful to drive and monitor Lean behavior: • Performance data is used to identify and solve problems as they occur • Always-on, no non-value added work is required to view critical data • Data is active - not to be viewed at your leisure and it comes to you when it needs to • Actionable data is continuously delivered to people who can improve performance • Critical data is being used to make decisions and influence behavior
• The impact on behavior can be measured and tracked through metrics
• Everyone is working off the same version of the truth
Building momentum for new methods
After initial credibility is established, LPOs are in a better position to work with stakeholders to get to the heart of and understand the underlying issues impacting performance. The information now provided allows the teams to share ideas about better managing the process. The atmosphere changes drastically from a hostile environment to an extremely friendly environment where open communication was encouraged. Introducing change often means understanding the issues and concerns before they pose a problem: • Is the right problem being addressed - mine? • How do we get the operators on-board? • How do we address union concerns? • Is the general direction heading a good one? • Will the solution solve my problems • What is in it for me? • What could go wrong? • Who might get hurt?
• How are we going to implement this?
• Are we really up to this? • Are we too busy to take on another project? • Is leadership commitment enough?
These question will all come up directly and indirectly so be proactive in addressing them. A good technique in doing this is to present a map of the information being collected to the types of information available to them. Commonly, information being collected can be characterized by:
• Work center • Work order number • Customer • Time of operation • Part or SKU being manufactured • Operation description • Ideal rate of production or production standard • Type of operation (rework, start, complete, etc.),
• Shift performing operation
• Name of the operator performing the operation • Resource used to perform the operation
• Stoppage of operation and reason
• Non conformance or quality defects
Enabling Lean behavior by visual performance controls
Achieving improved performance and its sustainability is a process which is greatly influence by organizational culture. Using visual performance analytics to enable Lean behavior means shifting evolving processes which means changing the way that people work and their focus. Commonly, the main focus of the stakeholders are focusing on meeting customer expectations and not necessarily taking the time to observe process for any type of continuous improvement opportunity. This is due to the fact that the stakeholders feel that there isn’t enough time for them to both manage the process and improve the process at the same time. Thus, one of the key tasks for adoption is to enable the users of the performance dashboards to have the opportunity to easily assess and identify variability at its source and at its root cause. This allows the LPO to use data to drive the application of Lean tools correctly so that everyone understands the “why” and the “how” of the Toyota Production System. Through the use visual performance analytics and controls as indicators to easily identify problems. Teach Lean principles to employees by creating a method that easily lends itself to using Lean tools to solve problems without specifically saying the tools are from "Lean." The main reasoning for this is to empower employees to feel that they came up with the methods themselves. Allow for easy formation of teams to solve problems and keep record of projects for knowledge sharing and monitoring them for sustainability.
In today’s global market, globalization is sweeping away the market and industry structures that have historically defined competition.
In response, many manufacturers are rapidly adopting and or evolving their Six-Sigma, TPM and Lean initiatives in order to accelerate, enhance and sustain their continuous improvement programs.
Soon these programs will no longer be a differentiating factor in of themselves. What is most important in 2009 is how well manufacturers implement and execute them within their value chains so that corporate strategy is driven down into operational execution with discipline and predictability.
Closing thoughts
Many organizations are now using visual performance analytics as an enabler to enhance their Lean culture and instill a Lean behavior by improving communication among stakeholders. Fundamentally, the elimination of wasteful the data gathering practices and information reporting should be on every operational executives agenda. Just calculate the direct cost associated with manually gathering data and information reporting function takes up 10% -15% of you employees’ daily time. Add another 5% - 10% for analyzing and interpreting the data only to find out that the information is inconsistent and inaccurate. This doesn’t even begin to calculate the hidden costs that are significantly higher. Utilizing the visual analytics dashboard reduces the tensions between LPO and distributed manufacturing work centers and stakeholders. Although, visual performance analytics is a technical solution, it brings a series of Lean principles that when combined with constant training and communication can lead to very powerful results. It is clear that any initiative requires change and change requires overcoming resistance to change. It is critical to have senior management clearly define the benefits to all stakeholders. Then resistance subsides and allows Lean to percolates and expand into ever-wider circles within the organization and starts to become a part of the very fabric of doing business. Don’t forget, business as usual is not an option for most organizations today, many organizations are actively evaluating methods of moving their Lean initiatives to the next-level and continue their Lean journeys by managing beyond the traditional tools and frameworks and toward building high-energy and engagement of employees from the shop floor upward, tapping into their ideas, focusing them on constant problem solving, and keeping them open to change, flexibility and high-performance.
Lean Value Solutions
12A Pasco Drive East Windsor CT. 06088 Office: 860-370-9657 Ext:11 Fax: 860-370-9658 Cell 860-836-6427
E-mail: contact@lvsillc.com