© 2009 Factory Strategies Group LLC. All rights reserved. Hoshin Kanri Lean Enterprise Series

2 © 2009 Factory Strategies Group LLC. All rights reserved. Outline 1.Definition of Hoshin Kanri 2.History of Hoshin Kanri 3.Introduction to Hoshin Kanri 4.Implementing Hoshin Kanri 5.Summary

3 © 2009 Factory Strategies Group LLC. All rights reserved. Hoshin Kanri Hoshin Kanri is a step-by-step planning, implementation and review process for managed change. It is a systems approach to the management of change in critical business processes. Hoshin Kanri is a proven technique that helps organizations focus efforts and achieve results.

4 © 2009 Factory Strategies Group LLC. All rights reserved. History of Hoshin Kanri After World War 11, Japan was faced with the difficult task of rebuilding its economy and infrastructure without out allowing the military to be rebuilt. Hoshin Kanri is a planning process that was developed in Japan but it is based on the US techniques of Management by Objectives and the classical Plan-Do- Check-Act (PDCA) improvement cycle. Hoshin Kanri is used to communicate company policy to everyone in the organization Its primary benefit is to focus activity on the key things necessary for successes. Japanese Deming Prize winners credit Hoshin as being a key contributor to their business success.

5 © 2009 Factory Strategies Group LLC. All rights reserved. Introduction: Process Top Management sets the overall vision and the annual high-level policies and targets At each level down, managers and employees participate in the definition, from the overall vision and their annual targets, of the strategy and detailed action plan Each level pass on targets to the next level. Each level under top management is, in turn, involved with the level above it to make sure that its proposed strategy corresponds to requirements. Regular reviews take place to identify progress and problems, and to initiate corrective action.

6 © 2009 Factory Strategies Group LLC. All rights reserved. Critical Behaviors People seem to need either a crisis or goals to achieve extraordinary outcomes. Research shows that performance-focused management practices can increase performance by at least 30-40%* Hoshin combines long and short-term planning methods with quality and objective management methods to produce a plan-to-do-act cycle. Leadership must take steps to close the gap between today’s performance and an organization’s vision. *Julia Graham: “Developing a Performance-based Culture” – The Journal for Quality and Participation, 2004

7 © 2009 Factory Strategies Group LLC. All rights reserved. Fundamental Systems Daily Management System deals with the operation and monitoring of micro work processes supports identification of task level work, creation and improvement of task level work processes, supports subject matter experts provides communication to management and cross functional work team encourages participation and involvement Cross-Functional Management System The improvement of processes spanning the entire organization Addressing issues such as product or service quality Lean Six Sigma is one example Critical to the management of an organization’s vision and mission, identification and management of cross-functional work processes, and issues and cross-functional work process improvements There are two management systems fundamental to Hoshin: daily and cross-functional management systems.

8 © 2009 Factory Strategies Group LLC. All rights reserved. Breakthrough Performance Plans The gap between the long-range plan and business fundamentals plan provides motivation for change The long-range plan is the basis for the annual plan which identifies what must be accomplished this year to move the organization along the path to the future as specified in the long-range plan It is very detailed and lays the foundation for what must be accomplished in the way of improvement (change) and how success will be measured Unlike the long-range plan, the annual plan likely will change significantly year to year Annual Plan