People + Lean + Process Innovations a b October 2009 Russ Scaffede

Leadership Roadmap Objectives A Little History Leading to My Being Here Today Mass Production VS. Toyota Production System Tiara Yachts Lean Development Integration of a Total Lean System Observations and What I Have Found Has Failed Closing and Questions

Leadership Roadmap Henry Ford’s Mass Production System –Henry Ford developed a Mass Production System, the World Followed –It is Important to keep in Perspective the Great Success the Ford System Makes The Past 20 years at General Motors and 5 years at Toyota Motor Manufacturing

Leadership Roadmap Early 1900s

Leadership Roadmap But, by the 1970s and 1980s until today!! Toyota Introduced Us To The “Toyota Production System” – Material is looked at from Just In Time Processes – Quality and Cost are controlled by Build In Station – Sequential level production synchronizes the system – Machine PM replaces repair after breakdowns

Leadership Roadmap The System is Uniform and Consistent Plant to Plant All Employees are Challenged to Participate in Reducing Cost All Toyota Staff from Chairman to the Line Workers Understand the System But, by the 1970s and 1980s until today!!

Leadership Roadmap Almost Every Company Has Some Form Of Lean/Continuous Improvement Initiative –Fewer than 5% of companies are achieving long term success like Toyota WHY? –I believe it is the failure of executives to understand lean as a company enterprise system –I believe in most companies Scanlon Principles are the key Missing Link But, by the 1970s and 1980s until today!!

Leadership Roadmap TRADITIONAL MASS PRODUCTION (FORD MASS PRODUCTION 1910’s) VS. Lean Production (Toyota Lean Production 1950’s)

Leadership Roadmap Cost Quality Safety Morale Maximize Equipment Run Time (Repair only after break down) All Materials Necessary to Run Any Schedule Productivity Labor Daily Schedule Run by Production Without Plant-wide Communicated Sequence (Prepared Ground Work) Continuous Run Inspect and repair Classifications of Support Float for Breakdown Labor Efficiency Measurable Large I.E. / Mfg.. Engineering Largest Possible Batch Run Skilled Trade Response to Work Orders Safety Quality Cost by Maximum Run Traditional Mass Production

Leadership Roadmap The History of Lean is NOT from Japan Deming’s Leadership in Statistical Process Control “Ford Today and Tomorrow” –Toyota Trained Under Ford’s Leadership Training Within Industry –Job Methods (Standardized Work) –Job Instructions (Job Instruction) –Job Relations –Union Job Relations

Leadership Roadmap Training Within Industry Materials

Leadership Roadmap Successful Implementation Must be a Systematic Process “One of my concerns after reading several books on the Toyota Production System is that, while such books do outline principles and techniques with detailed explanation, their treatment of the subject is specific and anecdotal rather than systematic.” Source: Shigeo Shingo, A Study of the Toyota Production System From an Industrial Engineering Viewpoint, Cambridge, MA. Productivity Press, 1989

Leadership Roadmap Cost Quality Safety Morale Equipment Reliability (Rock) Just-In-Time Standards Aimed at Continuous Improvement Level Production (Formulas, Policies) In-Station Process Control Productivity T/M Morale Quality Cost Safety Solid Support Solid Support Standardized Work Continuous Improvement Teams Job Rotation Andon Boards Suggestion System Visual Factory and 5S Total Productive Maintenance Batch of One Capability My Vision of TPS

Leadership Roadmap The setting of STANDARDS aimed at continuous improvement by ALL team members through the constant elimination of waste. Definition of LEAN MANUFACTURING SYSTEM

Leadership Roadmap “Standards” from Webster “Something used as a rule or ‘BASIS OF COMPARISON’ to evaluate quality, quantity, value, etc..”

Leadership Roadmap These philosophies and tools provide for two major focuses of improvement and waste reduction: 1) Aimed at material/value stream change control. (JIT, Level Scheduling, Hijunka Boards and Kanban Cards) 2) Aimed at total team participation through individual/team control of quality and machines. (ISPC, Equipment TPM, Standard Work, Participation, Job Inst. Training.)

Leadership Roadmap Both are guided by cascading the annual planning process of goal setting aimed at waste reduction and total team participation enhancing the individual team members self satisfaction and company identity. A Key Tool Allowing Focus From The Entire Team

Leadership Roadmap Integration of Scanlon and Lean

Leadership Roadmap Toyota Is 50 Times More Scanlonized Than We Have Ever Thought Of Being And They Have Never Heard The Term ! Joanne DuQuette, VP of Human Resources, speaking to the Donnelly executive team

Leadership Roadmap You Do Not Want To Be Toyota, Just Achieve Toyota Results Processing of product is the same for Mass and Lean companies Equipment purchased is the same for Mass and Lean companies People hired are the same for Mass and Lean –What Makes The Difference An absolute belief that everyone wants to win The engagement of ALL the People An absolute commitment of constant Process Improvement

Customer Advances Process R & D TPSTPS Advanced Product Planning TPS Marketing Production Engineering Product Design Manufacturing Tooling Engineering Product Planning Human Resources Product Engineering Sales Corporate Management Team Financial TPSTPS Product Launch Cycle (Updated Improved Standards) Life Cycle Of Product Achieving Lean Manufacturing Leadership (Continuous Improvement) At lowest possible cost TPS

Leadership Roadmap We believe that within every person is a deep-seated desire to realize his or her full potential through growth and development to make a difference and to be part of a winning team. What Makes a Winning Organization?

Leadership Roadmap “Brilliant process management is our strategy. We get brilliant results from average people managing brilliant processes. We observe that our competitors often get average (or worse) results from brilliant people managing broken processes.” Mr. Cho Vice Chairman of Toyota

Leadership Roadmap Broad Research Has Shown Only About 25% Of Workers: Are fully engaged in their work Are enthusiastic about team and organization goals Feel they are fully enabled to execute their goals Have a clear line of sight between their work and their teams organizational goals Work in an open trust-filled environment How Are We Doing With People Systems?

Leadership Roadmap Total Employee Involvement Scanlon Principle Identity Competency Participation Equity Total Employee Involvement OR Lean Manufacturing System Level Production Just-In-Time Visual Delivery System Machine Reliability Preventative Maintenance Total Productive Maintenance Stop the Line Traffic Light System Mistake Proofing In-Station-Process-Control

Leadership Roadmap Identity Purpose: Exceed Customer expectations by eliminating waste through a process of continuous improvement where people and teams including suppliers and customers are engaged in the process together and constantly striving for perfection. Do we believe that the process of becoming lean is permeating every part of our business and requiring a relentless pursuit to eliminate waste as a core value Business Reality: Waste exists in all parts of the business. If we understand “COST = SALES PRICE – PROFIT” and cost is the only controllable. Then are we understanding lean principles as the enabler for a “WAR ON WASTE”.

Leadership Roadmap Right Job: Have we developed a vision of our long-term lean system? Have we developed an implementation plan and dedicated the resources to accomplish the task? Have we developed a cascading annual planning system and supportive review to align the organization for improvement? Job Right: Progress of continuous improvement can only be measured against results. Have we identified the right matrix (safety, quality, cost, productivity, delivery and morale)? Is the entire organization aligned with our lean principles and values? Identity

Leadership Roadmap Understand that becoming lean is a process that is done “With” people and “Not To” people. A total commitment to mutual trust and teams is an absolute essential part of the lean journey. Do we see lean principles as the main enable to accomplish meaningful, inspiring participation? Participation

Leadership Roadmap “Two reasons appear then for looking toward the fuller involvement of people in their work. We need their help in reaching for market leadership, and the people are entitled to the consideration that recognizes their ability to help. This process of involvement is what we call participation.” Participation - John F. Donnelly, 1967

Leadership Roadmap Develop leaders who understand and live the lean enterprise philosophies. Are we developing a process for continuous learning by refining personal and organizational understanding of the lean tools and applications of these tools through supportive review. Competence

Leadership Roadmap Recognize, with lean, we need to achieve a fair and balanced return for all the stakeholders. Work closely with suppliers to eliminate waste in the total value stream and treat suppliers with respect as long term partners. Equity

Leadership Roadmap What I Have Found Will Fail The executive leadership team not developing their lean system –Develop your house and megaphone for the team to understand Functional departments leaders and team not understanding the lean enterprise and setting policies and methods to allow success

Leadership Roadmap Installing Kanban or Other Tools and State We Are Lean What I Have Found Will Fail Hire Outside Consultants Without Your Lean Vision - Your team wants to please you and your company, not outsiders. Kaizen the Team Lean

Leadership Roadmap Toyota: The Benchmark for World Manufacturing “The Toyota Production System is a production system, and a kanban method is merely a means for controlling the system.” Source: Shigeo Shingo. A study of the Toyota Production System From an Industrial Engineering Viewpoint. Cambridge, MA. Productivity Press, Shigeo Shingo

Leadership Roadmap And the Worst One Is: What I Have Found Will Fail Attempt Empowering Employees Without the Lean Tools Assume Management Will Install Lean as You Teach Them Without Resources Part-Time Won’t Cut It Do Nothing at All

Leadership Roadmap Lean without Scanlon Little Improvement Scanlon without Lean Limited Improvement Closing Thoughts Scanlon with integrated Lean = Perpetual Success

Leadership Roadmap There is a Roadmap “The Leadership Roadmap Book” Purchase on Amazon.com or Barnes and Noble.com Contact us at

Leadership Roadmap Thank You For Your Time Questions and Discussion