The Pyramid Principle：Logic in Writing and Thinking

The Pyramid Principle：Logic in Writing and Thinking The Pyramid Principle:Logic in Writing and Thinking Example Work Plans MMP Document April, 2002 CONFIDENTIAL This report is solely for the use of client personnel1>. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from McKinsey & Company. This material was used by McKinsey & Company during an oral presentation; it is not a complete record of the discussion. CONTENTS Production system design Quality improvement program OEE improvement program Kaizen program Scheduling program Visual performance improvement Organizational/capability building STEPS IN STARTING A PRODUCTION SYSTEM DESIGN Timing 1-2 months 2-3 weeks 2 months 1-2 months Who Production manager Production manager, outside resource Production manager, quality and maintenance managers Production manager, area managers, scheduler Step Find resource with experience designing lean production and scheduling systems Create initial system design Stabilize key areas that block implementation of new system (e.g., machine downtime) Implement and launch new system Source: McKinsey analysis SUGGESTED CLIENT 15 APPROACH Potential scope 2 weeks Current state assessment – target state design Business need validation Product and process profiling Problem identification Current state analysis Target state vision Quantification of opportunity Proposed tactical implementation plan Focus on major capacity losses Stabilization of equipment Process consistency and in-station quality Standardized labor activity and processes Definition of core production system Performance metrics and dialog Controlled inventory Changeover time reduction activities Controlled flow patterns to minimize losses due to Down time Speed loss Quality loss Consistency of production pace and output Demand-driven pull production schedule Direct feedback with upstream/ downstream customer linkages Improved communication with support departments (maintenance, scheduling, etc.) Auditing process Plan for sustaining support Ongoing 'check-up' support Maintain Stabilize Flow Pull Next area Phase 1: confirm opportunity Phase 2: capture opportunity for model line Phase 3: Team of lean experts rolls out to next area 16 weeks SUGGESTED PLAN FOR STABILIZATION PHASE Activity Sauce and salad dressing areas Kick off Dedicate resources Lean awareness training Determine metrics, plans & review process Communicate to business OEE improvement Pilot implementation (e.g., ultrakan) C/O workshop on-line Down-time problem solving Start-up loss elimination Visual control Roll out to other areas 5S and basic maintenance Configuration changes Identify formula location changes Minor equipment moves Investigate warehouse space saving, optimal totes, production pace Performance management Start data collection Implement scheduling board Implement hourly boards and reviews Monitor policy deployment Time (weeks) 0 2 4 6 8 10 12 14 16 Major workstream Ongoing support PRELIMINARY FUTURE LEAN DEVELOPMENT AT CLIENT 22 Characteristics Creating internal awareness, basic capability, and the right organizational support structure, e.g. Training on lean/basics to all levels of the company Dedicating resources to the group with focus on developing their capability Basic process stability Developing true distinctive system capability in your industry Defining and capturing the business value through application, e.g. Shorter lead times due to better production control Business growth through minimal capital investment using increased efficiencies Using as a source of strategic advantage, e.g. Recapturing lost market share Expansion to new market segments/new customer base Redefining relationship with customers through use of best-in-class inventory/replenishment systems Non-organic growth – further acquisitions with market premium? Stage 1 ;Awareness and stability; Stage 2 ;Complete system capability; Stage 3 ;Redefining your business model; Client 22 today Future focus Model Plant Develop SUMMARY OF OVERALL RECOMMENDED APPROACH Creation of model site and ;complete; production system Serves as a training environment for building additional advanced capability and demonstrates the future state potential Location 1 as a model plant makes sense Stable production processes and open management team Deep acceptance and application of basics allow for further development of as a system improvement tool Build in executive workshop to align management teams Dedicated time to rollout planning Continue existing efforts in basics Approach Content Focus pilot and high-priority resources on ;advanced; elements and consolidate the complete production system Senior management team connection with system to business strategy Clear rollout plan developed and resourced SHOP FLOOR EFFICIENCY APPROACH 7 weeks 1 week Current state assessment – target state design Business need validation Product and process profiling Problem identification Current state analysis Target state vision Quantification of opportunity Proposed tactical implementation plan Team formation and basic training Focus on major capacity losses Stabilization of equipment Process consistency and in-station quality Standardized work activity and processes Definition of core production system Performance metrics and dialog Controlled inventory Changeover time reduction activities Controlled flow patterns to minimize losses due to Down time Speed loss Quality loss Consistency of production pace and output Demand-driven pull production schedule Direct feedback with upstream/ downstream customer linkages Improved communication with support departments (maintenance, scheduling, etc.) Senior management session Auditing process Plan for sustaining support Ongoing 'check-up' support Maintain Stabilize Flow Pull Next area Phase 1: confirm opportunity Phase 2: capture opportunity for model line Phase 3: team of lean experts rolls out to next area Ongoing Team McKinsey EM + 1 McKinsey EM + 1 McKinsey EM + 1 Dedicated client resources Time MODEL AREA FOCUS ACTIVITIES Flow Implement performance metrics and visual controls Assess workplace design and layout Evaluate material flow (finished goods) from pack to staging areas Conduct changeover reduction activities Develop basic equipment/mold maintenance system Conduct product segmentation analysis and detailed demand analysis Pull Determine pace of production and pacing mechanism (takt time and conveyance loops, pace operations work) Determine levels of controlled inventory and locations (ifneeded) Develop new planning/production control system Determine if make-to-order or replenishment system Identify method of creating production schedule Design capacity analysis tool to assist in resource allocation as demand changes Senior Management Session 1-day workshop with Client 22 senior management team Lean production system awareness training Joint management discussion on results, potential business strategy implications, and rollout plans ALTHOUGH BENEFITS OF LEAN PRODUCTION ARE CLEAR, THE ACTUAL DESIGN AND IMPLEMENTATION OF A LEAN SYSTEM REQUIRES A WELL INTEGRATED COMBINATION OF ‘TOP-DOWN’ SYSTEM CHANGES AND REAL-TIME CHANGES ON THE FACTORY FLOOR (MODEL LINES) Delivered by production system Adoption of world-class manufacturing methods Local cultural change and capability building Design and implementation of ‘mini’-production systems CONCEPTUAL Model line Suppliers Customer Station 1 Station 2 Station 3 Delivered by model lines: Elements of Production System Linkage with overall business objectives Linkage to customers and suppliers Blueprint for model line sequencing Reconfiguration of common support processes Capabilities development Overall program communication Logistics Quality Systems Organisation roles and responsibilities Delivered by both Model line activity will ‘pull’ solutions from production system workstreams by creating a sense of urgency Model ‘line’ activities provide a use ready to pilot site-wide solutions Performance Management System McKinsey Source: LEAN TRANSFORMATION IS DONE IN WAVES TO PROMOTE EFFECTIVE LEARNING PROCESSES AND PROPER “ROLL-OUT” OF MODEL LINES Wave Identify quick wins that will immediately impact the bottom line Integrate inform-ation and material flows from order through distribution for model area Stabilize quality for model area Complete machine stabilization in model area Implement level schedule/pull system beyond pilot area Complete initial machine/process stabilization Begin implementing more key elements of lean production Attain all goals for quality, cost, and time in model area Start CI program Transfer lean principles into other plants Drive and reinforce continuous improvement Timing Objectives Likely initiatives 1. Implement quick hits and begin stabilization 2. Stabilize quality and implement level scheduling and pull system in pilot area 3. Implement level schedule/pull system in remainder of plant 4. Implement more in-depth lean processes in model area Continue to stabilize machines and quality processes throughout plant 5. Begin structured roll-out to other plants Lean training and best practice rollout 8-12 weeks 8-12 weeks 8-12 weeks 8-12 weeks 6-24 Months OEE Labor productivity/ Kaizen Visual Management Lean scheduling system Source quality improvement Training program Standardized work Cross-training CI Same as steps 1-4 EXAMPLE A LEAN MANUFACTURING APPROACH CAN BE USED TO DESIGN, PILOT, AND ROLL OUT AN OVERALL PRODUCTION SYSTEM THAT INCORPORATES ALL KEY ELEMENTS OF MANUFACTURING EXCELLENCE Set cornerstones of lean manufacturing program Begin team capability building Set clear performance targets Create immediate impact Initiate transformation of “anchor plant” on a few model lines to create immediate financial benefits and develop show case for customers and employees Design key elements of production system Management systems Key principles of material flow and information flow Common industrial standards Major IT standards Launch implementation of production system across plant network Replicate line transformation across all lines in anchor plant Introduce transformation program in other facilities around the world Diagnostic and blueprint development Production system design Transformation of pilot line Rollout Module I Module II Module III 2~4 weeks 4-8 weeks Time Objective 6-24 months* * Heavily dependent on size and complexity of network SUGGESTED PILOT AREA IMPLEMENTATION APPROACH X-X weeks Refine Current state assessment – target state design Business need validation Product and process profiling Problem identification Current state analysis Target state vision Confirm opportunity Proposed tactical implementation plan Focus on major capacity losses Stabilization of equipment Process consistency and in-station quality Standardized labor activity and processes Definition of core production system Performance metrics and dialog Controlled inventory Line & cell type layout Changeover time reduction activities Controlled flow patterns to minimize losses due to Down time Speed loss Quality loss Consistency of production pace and output Demand-driven pull production schedule Direct feedback with upstream/ downstream customer linkages Improved communication with support departments (maintenance, scheduling, etc.) Auditing process Plan for sustaining support Ongoing 'check-up' support Maintain Stabilize Flow Pull Next area Phase 1: confirm opportunity Phase 2: capture opportunity for model line Phase 3: Team of lean experts rolls out to next area XX - XX weeks WHEN IMPLEMENTING IMPROVEMENTS, A TRANSFORMATION APPROACH CREATES A HOLISTIC SYSTEM THAT DRIVES SUSTAINED IMPROVEMENT End products Phase 1: Stabilize and simplify flow Phase 2: Start lean system and further reduce waste Clear targets Road map Program organization Performance management for quality, OEE Formation of initial U-cell Synchronized, efficient production Visually impressive shop floor Stable, good performance on KPI’s Steps System design Implementation Typical timing -5 weeks 2 2-3 months 3-6 months 6-12 months System design and target setting Business level case establish-ment Roll out to other facilities* Roll-Out Continuous improvement (CI) Actions Clearly define business objectives of transformation Design system and set targets Stabilize production quality Improve and simplify flow Set up pull production Attack supply chain issues “Perfect” key tools (5S, etc.) * Roll out may begin during earlier, during Phase 2 of implementation Set up strong continuous improvement organization Establish roll-out program for all facilities Establish performance plans for CI and roll-out CI organization that is staffed and functioning Performance plans for CI organization Roll-out plans for other facilities (and results) MODEL AREA APPROACH Develop practical systems to countermeasure waste creation Build momentum for lean thinking Define current work practices and procedures Define material, information, and people flows Quantify baseline operational metrics Identify all forms of waste and understand how system drives waste Check/act Plan Do Lean diagnostic Make changes and test Refine 2 weeks 5 weeks 1 week Change layout to ensure sustainability and capturability Evaluate effectiveness of changes made Learn by doing and build internal experience Tools used 5S Production board Poka yoke Kaizen Standard work Kanban Test effectiveness of systems and countermeasure where applicable Evaluate metrics and determine areas for further improvement Create continuous improvement culture mentality Tools used Performance Management Improvement events Tools used Spaghetti diagram Value stream map Waste I.D. sheets 5 why analysis Develop tools, techniques, and measurements Progress Reviews Implementation overview (week 5) Present Results (End of week 8) Finalize Plan (week 2) Source: McKinsey Manufacturing practice Multiple areas 16 weeks? PSDC ENGAGEMENT APPROACH Ensure under-standing Select model line Create infra-structure Client-specific Source: PSDC U.K. model Clearly define business unit: operations strategic linkage Clear operational priorities, e.g., quality, capacity Specific current: target state picture Detailed tactical implementation plan Reduce major capacity losses Stabilize equip-ment reliability Process consistency and in-station quality Standardized labor activity and processes Define core production system Performance metrics and dialog Controlled inventory Redesign flow patterns to minimize Travel Wait time Inventory Production pace or takt time Reduce lot sizes Demand-driven pull production schedule Direct downstream customer linkages Audit process Create sustaining support plan 16 weeks ? weeks Prepare Current state assessment – target state design Stabilize Maintain Pull Flow Sustaining support SUGGESTED PLAN FOR STABILIZATION PHASE Activity Sauce and salad dressing areas Kick off Dedicate resources Lean awareness training Determine metrics, plans & review process Communicate to business OEE improvement Pilot implementation (e.g., ultrakan) C/O workshop on-line Down-time problem solving Start-up loss elimination Visual control Roll out to other areas 5S and basic maintenance Configuration changes Identify formula location changes Minor equipment moves Investigate warehouse space saving, optimal totes, production pace Performance management Start data collection Implement scheduling board Implement hourly boards and reviews Monitor policy deployment Time (weeks) 0 2 4 6 8 10 12 14 16 Major workstream Ongoing support PRELIMINARY PILOT AREA PHASES Current state assessment - Target State design Stabilize Flow Pull Ongoing CI Objectives Clearly define business unit: operations strategic linkage Clear operational priorities – e.g., quality, capacity Specific current: target state picture Detailed Tactical Implementation Plan Reduce major capacity losses Stabilize equipment reliability Process consistency and in-station quantity Standardized labor activity process Core production system Performance metrics and dialog Controlled inventory Redesign flow patterns to minimize Travel Wait time Inventory Production pace or takt time Reduce lot sizes Demand-driven pull production schedule Direct downstream customer linkages Ongoing Policy Deployment Kaizen teams Employee involvement HR and training systems Time 3 - 4 Weeks 4 - 9 Months Ongoing PILOT PHASE APPROACH Pilot phase Key levers Core activities Example tools Labor availability Machine uptime Material availability Quality Maintenance Measure OEE Identify sources of instability Prioritize problems Solve problems Daily performance management OEE Pareto diagrams Problem solving, e.g., Six Sigma PDCA cycle 5 Whys Fishbone diagram Fault trees Standards 5S/workplace org. Visual control PM models Customer requirements Layout, mfg.. conveyance 1 piece flow Capacity Map material and information flows Analyze, capacities Physical configur-ation cell design Machine capacity chart Spaghetti chart Combination table Machine cut-outs TAKT time Work sequence Standard in process stock Work standards Standardization Training Cycle time improvement Motion improvement Line balancing Line balance chart Work standard chart Work sequence chart TAKT time Information flow Store locations Conveyance frequency Order levels Design system Implement control system Staging box Flow pack Withdrawal/ signal KANBAN Order point analytics Demand profile Scheduling system Finished goods inventory Sequencing/ mixed model Analyze demand Change presentation of demand Redesign scheduling system Heijunka box Motion economy SMED/ changeover Flow Stability Standardized work Pull Level orders (small lot) Six Sigma effort will support initial stabilization efforts PROCESS IMPROVEMENT APPROACH Timing: Activities: 6 weeks Develop clear recommendations and approach to improve line 6 months Develop production system Standardize practices across lines Integrate activities with supply chain initiatives Diagnostic Stabilize operation Standardize operation Build production system 6 months Improve line OEE to 85% Roll out maintenance program to all equipment Implement operator TPM activities Develop shop floor visual controls Transition bottleneck equipment improve-ment activities to all equipment and support areas Establish improvement processes as business systems 6 months Increase bottleneck equipment OEE to 85%, 95% Reduce downtime, ware/scrap loss, setup time, and operator/input variation asso- ciated with press Balance assembly area Implement performance management system Hand over to client Complete Current focus CONTENTS Production system design Quality improvement program OEE improvement program Kaizen program Scheduling program Visual performance improvement Organizational/capability building LAUNCH A QUALITY IMPROVEMENT INITIATIVE TO MAKE A STEP-CHANGE IMPROVEMENT IN CUSTOMER REJECT RATE* Select team of most highly skilled employees from different functions Temporarily back-fill positions of team members Establish target reject rate level Collect all available data for customer rejects Establish new collection processes where data is not available Analyze data and select 2-3 most critical specific customer quality issues Assign team members and area personnel to sub-teams for priority issues Perform detailed root-cause problem solving (5 whys, fishbones, DOE’s, etc.) around key issues Generate potential solutions Implement solutions Measure to see if issues are resolved„ if yes, return to step 3; if no, return to step 4 Select high-power team and set target Collect detailed data Prioritize biggest issues Perform rigid problem solving Implement solutions, measure results <1 month 2 days 1-2 weeks 1 week Time <1 month Activities President, Production manager Main team, President Main team, sub-teams Main team, sub-teams Team Main team * Program could focus initially on motorcycle engines and then transfer approach and capabilities to lawnmower engines Source: McKinsey analysis STEPS CAN BE TAKEN TO START A PROGRAM FOR IMPROVING SOURCE QUALITY Timing 1-2 months 2 weeks 2 weeks 2-8 weeks 2-3 days Who Production manager, quality manager, problem solving expert Production manager, quality manager, BU manager, expert Production manager, area manager Initiative teams, area manager, expert, Initiative team, area manager Step Collect initial data for quality at each step and customer representative rejects Prioritize areas of focus and generate target Select and launch problem solving teams around priority area(s) Perform root-cause problem solving and measure results Summarize results Repeat until initial “step change” targets are met Source: McKinsey analysis CLIENT 2 SHOULD START WITH QUALITY IMPROVEMENT EFFORT 8 9 10 11 12 1 2 3 4 Task Month (A) Quality performance management, policy deployment and continuous improvement Set company level targets for improvement and break down to line level Install big whiteboards for visual performance display Set up continuous improvement (CI) team Collect quality data and prioritize Run root cause problem solving Implement improved performance measurement Set up management feedback loops CLIENT 2 SHOULD START WITH QUALITY IMPROVEMENT EFFORT (CONTINUED) 8 9 10 11 12 1 2 3 4 Task Month (B) Production and scheduling system Select pilot line Level production to take time based on monthly customer demand Pilot leveled schedule Develop pull system for internal material flow based (coordinate with i2) on current practice Pilot pull system (C) Component quality and supplier management Review current evaluation system Develop new score card system based on best practice Deploy new measurement system to suppliers Launch pilot A. STEPS IN IMPROVING QUALITY PERFORMANCE MANAGEMENT AND ESTABLISH POLICY DEPLOYMENT SYSTEM AND CONTINUOUS IMPROVEMENT PROCESS Timing 2 weeks -3 weeks 2 2-3 weeks 3-4 weeks 3-4 weeks 1-2 months On-going Who BU head and production manager Production manager, Line managers BU head, CI-team Top management, CI team Production manager, quality managers, production team Production manager Top management, CI team Step Set company level targets for quality improvement and break down to organization Install big white boards for line performance including product / component quality Set continuous improvement process and team Collect quality data and prioritize problems, set targets and develop roadmap Run problem solving cycles to solve prioritized problems Implement improved measures and coordinate with related departments to fix outside manufacturing quality problems Establish management feedback loops Source: McKinsey analysis STEPS CAN BE TAKEN TO START A PROGRAM FOR IMPROVING SOURCE QUALITY AND WARRANTY REPAIRS Timing 4-8 weeks 1-2 weeks 2-3 weeks 2-8 weeks 2-3 days Who BU manager, service manager, quality manager, BU manager, service manager, quality manager Project leader, area manager Initiative team, area manager Initiative team, area manager Step Collect initial data Internal quality at each step Short-term repairs Long-term warranty repairs Prioritize areas of focus and select improvement approaches & target Pilot problem solving approach on priority issues Select and launch 2-3 initiative teams around other priority area(s) and implement countermeasures Measure results, prioritize next issues to address Repeat until initial “step change” targets are met* * Total time may be long due to time required for feedback from the field Source: McKinsey analysis THE IMPROVEMENT STEPS SHOULD BE SEQUENCED CORRECTLY TO ASSURE PROPER IMPLEMENTATION Source: McKinsey analysis Perform 5S pilot in model area Establish 5S promotion team Select measurements for visual management Start measuring and visually displaying key KPI’s Analyze demand and production data in detail Design new system for production scheduling Analyze available data for customer returns and warranty repairs and prioritize biggest issues Set program targets Start data collection for unknown items Perform structured root-cause problem solving on highest priority items Establish review mechanisms for managing results Run problem solving in PDCA loop until targets are achieved Set inventory targets Implement new, highly standardized production scheduling process using pull principles on pilot area Stabilize and tweak new system Roll out system for all products Launch system across all products Start 5S and visual management program Design new pull-based scheduling process Improve inventory control; continue 5S and visual management approach; stabilize Pilot scheduling Launch program to reduce variability and warranty repair rates 1 Month 2 Months 1.5 Months CONTENTS Production system design Quality improvement program OEE improvement program Kaizen program Scheduling program Visual performance improvement Organizational/capability building STEPS IN STARTING AN OEE IMPROVEMENT PROGRAM Timing 1-2 months 1 week 2 weeks 2-8 weeks 2-3 days Who Production manager, maintenance manager Production manager, maintenance manager, president Production manager, area manager Initiative team, area manager Initiative team, area manager Step Collect initial data Capacity OEE Prioritize areas of focus and select improvement approaches & target Select and launch initiative teams around priority area(s) Perform improvement approach and measure results Summarize results Repeat until overall OEE target is met Source: McKinsey analysis STEPS CAN BE TAKEN TO START A PROGRAM FOR IMPROVING OEE Timing 2-3 weeks 2 weeks 2 weeks 2-4 weeks 2-3 days Who Production manager, maintenance manager, OEE/TPM expert Production manager, maintenance manager, expert Production manager, area manager Initiative team, area manager, expert Initiative team, area manager Step Collect initial data on OEE for bottleneck or highest-priority equipment Prioritize losses to focus on and select improvement approaches (such as SMED or TPM) & select targets Select and launch initiative teams around priority area(s) Perform improvement approaches and measure results Review results and re-prioritize efforts Repeat until initial “step change” targets are met, and then attack next machines Source: McKinsey analysis CONTENTS Production system design Quality improvement program OEE improvement program Kaizen program Scheduling program Visual performance improvement Organizational/capability building STEPS CAN BE TAKEN TO APPLY A KAIZEN PROGRAM TO IMPROVE LABOR PRODUCITVITY Timing 1-2 weeks 2 weeks 2-3 weeks 10-12 weeks 6-18 months Who Plant manager, Lean facilitator Lean facilitator, Kaizen manager, shop floor representatives Kaizen manager, plant manager, lean facilitator Kaizen manager, lean process engineers Kaizen manager, lean process engineers Steps Select target area of plant to pilot lean methods (e.g., final assembly) and Kaizen manager Perform “Kaizen event”, analyzing labor utilization and work definition, implementing new approach based on lean principles Select sequence to roll-out approach to rest of plant through other Kaizen events Start first-phase roll-out approach, creating / training a group of “lean process engineers” in the approach Start long-term roll-out across plants Source: McKinsey analysis CONTENTS Production system design Quality improvement program OEE improvement program Kaizen program Scheduling program Visual performance improvement Organizational/capability building STEPS CAN BE TAKEN TO DESIGN IMPLEMENT A LEAN PRODUCTION SCHEDULING SYSTEM Timing 0-2 months 3-4 weeks 2-3 weeks 1-2 weeks 2-3 weeks 6-12 Months Who BU manager Production manager, outside resource Production manager, production team Production manager, area managers, scheduler, Production manager, area managers, purchasing Purchasing manager, production manager Step Find resource with experience designing lean production and scheduling systems Develop system design by leveling production to monthly customer takt time Pilot leveled schedule on one line Develop pull system for internal and purchased material flow Pilot pull system for internal and purchased material flow -out pull system to suppliers Roll Source: McKinsey analysis CONTENTS Production system design Quality improvement program OEE improvement program Kaizen program Scheduling program Visual performance improvement Organizational/capability building STEPS CAN BE TAKEN TO CREATE A VISUAL PERFORMANCE MANAGEMENT PROGRAM TO DRIVE AND SUSTAIN IMPROVEMENTS Timing 3-4 weeks 2-3 weeks 2-3 weeks 2-3 weeks Who BU head and production manager, outside facilitator Production manager, Line managers, outside facilitator Production manager, quality managers, production team Top management, manufacturing managers Step Set company level targets for quality improvement and break down to organization Install large displays for line performance across shop floor Collect data and prioritize problems, set targets and develop roadmap Establish review mechanisms (meetings, etc.) to review performance vs. target and take action when targets are not met (for both CI and normal company targets) Source: McKinsey analysis Final 2 steps are ongoing STEPS CAN BE TAKEN TO CREATE A 5S / VISUAL PERFORMANCE MANAGEMENT PROGRAM Timing 1-2 weeks 1-2 weeks 2-3 weeks 3-4 weeks 3-4 weeks 2-3 weeks Who Production manager Production manager, Line managers Production manager, production team, project leader Project leader, plant manager Manufacturing managers, project leader Plant manager, manufacturing managers Step Select pilot area for implementation of detailed 5S and visual management Select KPI’s to use for visual management Implement “model area” for 5S and visual management Set up 5S program training and launch plant-wide Roll visual management approach out throughout plant Establish review mechanisms (meetings, etc.) to review performance vs. target and take action when targets are not met (for both CI and normal company targets) Source: McKinsey analysis STEPS CAN BE TAKEN TO CREATE A 5S / VISUAL PERFORMANCE MANAGEMENT PROGRAM Timing 1-2 weeks 1-2 weeks 2-3 weeks 4-5 weeks 3-4 weeks 2-3 weeks Who Production manager Production manager, Line managers Production manager, production team, project leader Project leader, plant manager Manufacturing managers, project leader Plant manager, manufacturing managers Step Select pilot area for implementation of detailed 5S and visual management Select KPI’s to use for visual management Implement “model area” for 5S and visual management Set up 5S program training and launch plant-wide Roll visual management approach out throughout plant Establish review mechanisms (meetings, etc.) to review performance vs. target and take action when targets are not met (for both CI and normal company targets) Source: McKinsey analysis CONTENTS Production system design Quality improvement program OEE improvement program Kaizen program Scheduling program Visual performance improvement Organizational/capability building Make it happen Technical solution + = TRUE IMPACT Largely covered by either the model line and the Production System implementation Making things happen is the focus of change management. It can take on two mutually reinforcing dimensions: (1) Increase the desire to change (will); and (2) make things easier (skill). THE TECHNICAL SOLUTION (MODEL LINE AND PRODUCTION SYSTEM DESIGN WORK) IN THEMSELVES WILL NOT BE ENOUGH TO ACHIEVE IMPACT – CHANGE MANAGEMENT IS REQUIRED TO ‘MAKE T HAPPEN’ Source: Adapted from Kubler-Ross and Healing the Wounds, David M. Noer, Ivan Hutnik Major change announced Time A CHANGE MANAGEMENT APPROACH WILL BE REQUIRED TO MOVE PEOPLE FROM THE INITIAL SHOCK TO ACCEPTANCE AND RECOVERY Denial Anger, fear Depression Resistance Rejection Bargaining Acceptance Adaptation Recovery Grief New mentality Open communication Continuous improvement MOVING ORGANIZATIONS’ THROUGH CHANGE REQUIRES CONSCIOUS PLANNING TO BUILD CHANGE READINESS AND NEEDS TO BE SUPPORTED BY COMPREHENSIVE COMMUNICATION EXAMPLE 1. Accept that change is needed 2. Understand change program Build confidence that change is possible 3. 4. Resolve concerns about the effects on them 5. Inspire people at all levels to act 6. Know what to do differently on Monday Old mentality Communication Key activities Assessment of situation (forced internally or externally) Communicate the crisis JIT simulation JIT training Gemba work-shops Benchmark visits within own country or industry Workshops (work sessions) to understand the scope of lean required Define site-specific areas of change; assign responsibility and create work teams Begin model line transformation Take initiative to design overall production system incl. subsystems Institute review processes for key milestones Create Change Mgt. Structure Assign top-tier manager to lead change effort Begin external recruiting effort Run first round of Policy Deployment to set targets for improvement Develop internal resources Recruite from external sources Inside a ;pilot area; transformation generally follows a path from stabilization, creation of product flow, and finally implementation of a linked, demand/pull system