1. Strategic Perspective to Fleet’s Total Cost of Ownership

2. Most Organizations Struggle to Stay Competitive
While a few seem to find ways to become truly exceptional!

3. The DIFFERENCE? Becoming Principle Focused Correct Principles!
Traditional wisdom is frequently based on:
Incorrect or outdated principles
Only one principle at a time

4. Becoming PRINCIPLES Driven
THINKING
BELIEFS
BEHAVIORS
OPERATIONAL EXCELLENCE Culture
A WAY OF THINKING WHICH IS GUIDED BY THE UNDERLYING PRINCIPLES. The Toyota thinking system is created by these core lean principles.
Behavior depicts the organizational culture, this is why we assess to the behavior – you can’t fake it.

5. Example If it’s not broke, don’t fix it.
Traditional ‘common sense,’ that doesn’t make any sense at all

6. Shigeo Shingo
This is one of Dr. Shingo’s proudest moments although it is not apparent.
Shigeo Shingo was one of the most prominent thinkers and practitioners as it related to the principles of Lean
Certainly the most prolific at capturing his experiences and learning and writing them for the benefit of others
Utah State University honored Dr. Shingo’s life work in 1988 by bestowing the honorary Doctorate degree upon him
This really was one of his proudest moments
Shortly after this event the Shingo Prize as a recognition program was developed and launched

7. WHY HOW KNOW- Shigeo Shingo IF IT’S NOT BROKE, BREAK IT
CHALLENGING THE STATUS QUO – PRINCIPLE FOCUSED
Dr. Shigeo Shingo new a simple truth that seemed to escape so many…sustaining a culture of continuous improvement was not about being an expert in using the tools and systems, but asking the deeper questions “what’s the need”, “why are you doing it this way.” He had a nervous itch to always seek out areas where problems didn’t seem to exist. And challenged the paradigm “if its not broke don’t fix it.” His philosophy was “if it’s not broke, brake it”, that way we can see how to improve and fix any thing that might interrupt flow in the future.
(RI-4)

8. Cost Management/Control
How is it that so many organizations focused on lower costs, never achieve greatness (or real significant cost reduction, for that matter)?

9. Cost Management/Control
Narrow focus?
Wrong focus?

10. What is the Correct Principle?
Accelerate the FLOW of VALUE
And its converse – Identify and Eliminate Waste

11. Focus on Flow of Value What is value? What is waste? What is flow?
Flowing Value – Principle based Focus!
Identify and Eliminate Waste –
Everyone can contribute – every day

12. 7 Wastes Over-Production Inventory Waiting Defects Motion
Transportation
Over-Processing

13. Economies of Flow Reduced Lead Time
Increased reliability and predictability of results
Reduces Flow Time
Matches supply to demand and sustains pricing levels
Improves responsiveness to demand and product changes
Reduces overall customer inventory
Reduces customer time to market (or similar)

14. Economies of Flow Cost Quality Productivity
Reduced costs of poor quality – inspection, rework, scrap, etc.
Quality must improve as flow velocity increases
Less inventory makes defects more obvious
Productivity
Decreases work time that is non-value added
Reduced overhead functions like:
Purchasing
Planning & Control
All accounting for these
Reduced inventory control points and complexity
Decreases needless movement of product

15. Economies of Flow Cost (cont.) Increased Value
Lower capital investment
Less space
Smaller equipment & less complexity
Lower inventory costs
Significantly improved operational equipment availability
Increased Value
Less Feedback Delay speeds improvement rate
Closer positioning improves communication and feedback
Complex systems improve rapidly
Clear determination of value added and non-value added

16. Necessary but NOT Sufficient
The principle - Flowing Value - is absolutely necessary
There are other principles that are also required to achieve greatness
The other principles magnify the impact of Flowing Value

17. WHAT ARE THE PRINCIPLES OF OPERATIONAL EXCELLENCE?

18. SHINGO MODEL EXCELLENCE for OPERATIONAL
THE
SHINGO
MODEL
for OPERATIONAL
EXCELLENCE
Represents a major transition for The Shingo Prize
Have spent 20 years promoting, teaching, encouraging and recognizing in manufacturing sector
Name change from Manufacturing Excellence to Operational Excellence is critical in defining our future
Will share details of what has changed
Why it has changed
Information about the new model developed to assist with Lean transformations
Finally where we are going in the near future

19. 10 Principles Nurture humility and respect for the individual.
All value is created through processes.
Maintain constancy of purpose.
Seek perfection.
See complex systems holistically, dynamically, and as closed loops.
Seek to understand value from the customer’s point of view.
Value can only be created with demand.
Accelerate the flow of value.
Embrace Jidoka: Separate people from machines and  Stop and Fix
Ingrain scientific methods throughout the organization. (Everyone is a scientist)

20. High Velocity Organizations
Imbed all of the principles of ‘operational excellence’
Recognize the interdependence of the of the principles
Nurture a culture of total employee involvement in rapid continuous improvement
Achieve incredible results consistently

21. Principles Apply Everywhere
Management
Planning
Quality
Delivery
Cost
Financial
Human Resource
Information
Administrative
Product/Service Development
Supply
Operations
Customer Relations
Concepts derived from Hino's book, "Inside the Mind of Toyota"
MIDDLE MANAGERS:
Develop systems in accordance with top management's direction
Internal Support Systems
TOP MANAGEMENT:
Exerts leadership through principle based
paradigms and culture,
Business Systems
EVERYONE:
Quietly engages in work
system improvement (kaizen)
Leaders P 80%
Managers S 80%
Employees T 80%
(FLIP CHART)

22. ADDITIONAL TOPICS AS TIME PERMITS

23. Mental Models Traditional Mental Models (Not based on Principles)
Standard Costing
Managers/Engineers make all improvements
Keep moving even if we are going in the wrong direction
Empowering workers is giving up control
Cost control systems control costs

24. Application of the model — like real transformation — is not a sequential, well-cadenced progression throughout a company.
The Shingo levels of transformation can vary within a dimension or business process, and, further still, some aspects of a business process might be developed to an Enabler dimension while others operate at a more advanced Process-Focused Improvement dimension.
II. The Shingo Prize Model
a. Levels of Transformation

25. LEADERS MANAGERS EMPLOYEEST
LEADERS
MANAGERS
EMPLOYEES S
PRINCIPLES T P
SYSTEMS S P
TOOLS
Misconception is that a Lean organization is ONLY Principle focused…not true. They need to have all 3 Focuses.

26. THE PERFECT SYSTEM…
can not be designed into its work from the start…no brain trust could ever figure out in advance all the little things that could go wrong.
Share story Three Mile Island, pg Chasing the Rabbit.

27. 3 Mile Island Story
COMPLEXSYSTEMS