RoundPeg Associates - Lean Enterprise

LEAN ENTERPRISE

It's the one word we all know, waste. In fact we can be more specific, any human activity which absorbs resources but creates no value; errors that need to be rectified, producing parts that no one wants, moving a customer order through various departments for approval, building inventories of material, groups of people waiting around whilst upstream operations have not delivered on time. These are just a few examples we can all relate to in our business and personal lives.

The disease of the waste and not creating any value, has a powerful antidote; Lean and Six Sigma. Lean is discussed here, whereas as Six Sigma is discussed later, However, the combined power of these has been offering businesses involved in manufacturing, service, retail, public services, construction and financial services huge bottom line savings and generating massive revenue opportunities through their ability to further differentiate themselves form their competitors.

When people hear Lean , they think 'manufacturing', but the principle of speeding up processes applies to non-manufacturing (transactional) processes as well as manufacturing. In fact, even if you wished to improve only manufacturing cost, quality, and lead-time, you would have to improve the velocity, responsiveness, and quality of the associated transactional processes as well. Lean means speed, not manufacturing.

Methodology

The objectives of the Lean Enterprise are simple:-

(1) Correctly specify value for the customer, avoiding the natural tendency for each business along the value stream to define differently to advantage its own role.

(2) Then identify all the actions required to bring a product from concept to launch, from order to delivery, and from raw material into the hands of the customer and on through its useful life.

(3) Next, remove any actions which do not create value and make those actions which do create value proceed in continuous flow as pulled by the customer.

(4) Finally, analyse the results and start the evaluation process over again. This time improve it further.

We are creating a responsive and flexible business to cater to varying customer demands and expectations, that we can consider repeatable and sustainable. It is something that must be easily understood by everyone involved in adding value throughout the value stream.

Application Results

Multi National		$6 Billion working capital savings from revenue chain.
Administrative		30% improvement in throughput time in order fulfilment time.
Restraints Assembly		50% reduction in labour costs.
Electronics Assembly		80% reduction in lead-time through layout design.

Foundry		35% increase in capacity utilisation.
Manufacturing		Reduction in lead-time from 30 days to 6 hours.
Fabrication		70% reduction in productive area.
Financial Services		50% improvement in transaction cycle times.

Sponsors

The sponsors are essential components of a Lean Enterprise structure as they provide the steering with the champion, masters, black belts and green belts. They must decide that adoption of these new methods is of strategic importance to the company. They receive training over a 1 to 2 day period. The sponsor must also perform a role in infrastructure processes by: -

· Consistently communicating the strategic priorities to direct reports.
· Following up communication with action by constantly reinforcing the importance of Lean Enterprise efforts to both direct reports.
· Monitoring the rolled-up results versus plan and taking corrective actions.

Champions

The champions are the glue that holds the Lean Enterprise together by building critical bridges between business-unit strategies and black belt projects. They receive training over a 1 to 2 day period. The role of the Champion would include: -

· Develop deployment plans for the business.
· Oversee the deployment in their business.
· Identify and remove barriers to improvement implementation.
· Provide ongoing communication throughout the business.
· Ensure there is engagement within the business to Lean Enterprise, not compliance.
· Work with the financial organisation to verify bottom line impact of each improvement projects.
· Provide integration across business units.

Master Black Belts

The Master Black Belt act as internal consultants to Black Belts and their teams. As such, the Master Black Belts must be experienced in successfully managing improvement teams to reach goals using improvement tools and skilled leadership. They are expected to complete 2 waves of Black Belt training and project mentoring.

Black Belts (Team Leaders)

The Black Belts are full-time positions responsible for leading project teams. They are responsible for delivering value and benefits that were determined for each of their projects during the project selection process. They receive training over a 20 day period (typically 5 days per month over a 4 month duration). The role of the Black Belt would include: -

· Working with sponsor and champions to formulate and implement Lean Enterprise improvement projects.
· Complete 2 Lean Enterprise projects per year which have strategic importance to the business.
· Train Green Belts in the lean principles, tools and techniques.

Green Belts (Team Members)

The Green Belts are part-time, on a specific process about which he or she generally possesses knowledge important to the success of the project. They receive training over a 6 day period. The role of the Green Belt would include: -

· Working with Black Belts on improvement projects.
· Green Belts focus on projects which provide stability and standardisation within the business.