Managing Times - Bunge Case Study - August 2006

August.06

MANAGING

PUBLISHER’S NOTE

CASE STUDY

TIMES 2

STRATEGIC VISIONING

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TECH TALK

Bunge Argentina Using LeanSigma® To Make Molehills Out of Mountains

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PUBLISHER’SNOTE

Education Is Empowerment

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ducation is one of the most critical steps in empowering your people to engage in the kind of continuous improvement and creativity that can enable the enterprise to grow. Education comes in many forms, and providing education to someone doesn’t necessarily mean sending them to a university or trade school. Manufacturing companies, like other organizations, must encourage their best resources— their people—to continue to learn and grow. And on a continuing basis, all of us face the critical issue of finding and keeping qualified and motivated employees. One very effective antidote to this issue is personal mentoring.

Mentoring provides a number of advantages. A mentor, typically in upper management, can find better access to the “employee state of mind” down deep within the organization when involved in a mentoring relationship. Mentoring can also help managers identify leaders and doers—the very people who may well become the next-generation leadership in the organization. This is especially critical for companies that need to consider succession planning and don’t want the legacy of the lean transformation to fall by the wayside with a change at the top.

Mentoring is also a form of team-building. Just as with kaizen teams who understand that the group is “in it together” to find a solution to a problem, mentors and protégés develop a sense of togetherness that can spread to other workers who benefit from the relationship through shared knowledge.

Mentoring promotes trust and respect, which are the first steps toward understanding and acceptance— steps that lead to the ability to bridge divides and facilitate problem solving using the intimacy of the mentoring relationship to overcome obstacles.

Mentoring can also be a way for someone who has been successful within a company to give something back—a bridge from the top to the bottom or any level in between that can aid in growing the company and ensuring the longevity of its successful culture or proprietary road map for success.

If a company encourages mentoring and views it as a long-term program, then success will likely follow. Once employees see that an organization cares about them and their needs, many will actively perpetuate the cycle—and that can create the fabric for a highly loyal, united, and competitive workforce.

Mentoring goes hand-in-hand with good lean leadership. Lean leadership requires a commitment from top management to not only have a plan for a lean transformation, but also to drive that plan by empowering employees to learn, think, and act creatively. In this issue, we see how one process agribusiness, Bunge, has found LeanSigma® to be the ideal means for melding corporate concerns (quality, productivity, safety, and efficiency) with its corporate ideals (maintaining a flexible and efficient organization with a focus on integrity, the customer and the farmer, teamwork, an entrepreneurial mindset, and openness and trust) (p. 2). Being a lean leader is addressed in a report from the 2006 Lean Leaders Exchange (p. 6), and the theme of lean leadership is carried further with an article on the importance of policy deployment (p. 9), as well as an article on management’s responsibility for recognizing when abnormalities become “normal” and changing the culture to recognize and remediate abnormalities (p. 10).

Underlying all of these issues is education, because it is the foundation for creating successful leaders—at all levels of an organization. Encourage mentoring in your organization, and you will encourage new leaders, all to your benefit.

Anand Sharma, President & CEO, TBM Consulting Group, Inc. asharma@tbmcg.com

MANAGING

TIMES

LEANCOMMUNITYNEWS

A publication of TBM Consulting Group 800.438.5535, www.tbmcg.com

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ndy Horbachchevsky, formerly KPO manager at Steinway in New York, has been promoted to general manager. … Dan Klassen, formerly with the Global LeanSigma Office at EDS, has joined Pella Corporation’s human resources team. … Claudia Hall, regional manager for the Contract Division at Sealy, was named KPO for the corporate business process initiative. …

Mark Phillips has joined the Kaizen Promotion Office at Vanguard Furniture.

He was formerly an upholsterer at Vanguard. TBM welcomes several new consultants to TBM team. Dom Sawchuck and Harold Tessman will be based in the U.S. Moisés Garcia, Francisco Javier Ayala, and Jose Luis Garcia Hernandez will join TBM’s Mexico team. TBM also welcomes Beth Ann Hunt and Michael Zsitnyar to its Durham office. Beth Ann and Michael will be working in TBM Institute sales.

Publisher Anand Sharma asharma@tbmcg.com Executive Editor William A. Schwartz bschwartz@tbmcg.com Managing Editor Julie Poudrier jpoudrier@tbmcg.com Featured Columnists Mike Caldwell Charlyn Daugherty Gary Hourselt Marco Nascimento

Bill Schwartz Sam Stevenson Noel Temple

Contributors Stacy Aponte-Morris Olga Bouche Steve Hahn Bob McElroy Mike Noonan

Bob O’Briant Gary Rascoe Bill Sample Ron Wince

Art Direction and Design IONA design info@ionadesign.com Printing Carter Printing & Graphics, Inc. www.carterprintingnc.com Published bi-monthly in Durham, NC 4400 Ben Franklin Boulevard Durham, NC 27704 TBM Consulting Group, Inc. is the sole licensee of LeanSigma®, a registered service mark of Maytag Corporation If you would like to receive this journal via email, send your vital information including email address to tbm@tbmcg.com

On the cover: When there is a high demand for a product, and a process runs around the clock nearly every day of the year, concerns about quality, productivity, safety, and efficiency loom large. Bunge Argentina is using LeanSigma® to address those concerns while staying true to the corporate goals of maintaining a flexible and efficient organization with a focus on integrity, both the customer and farmer, teamwork, an entrepreneurial mindset, and openness and trust.

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CASESTUDY

Bunge Argentina: Preparing for the Future with LeanSigma®

By Marco Antonio Nascimento, TBM Senior Management Consultant

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icture mountains of soybeans dwarfing the people and heavy equipment used to move them— hills of beans like so many large, rounded grains of sand waiting to be moved from ship to plant. It’s a staggering sight to see so much of one grain in one place, and this is what greets the visitor at the port operations of Bunge Argentina’s Puerto General San Martín Industrial Complex, located on the Paraná river coast. Here the mountains of soybeans are crushed into meal and crude vegetable oil and then exported throughout the world. The port facility handles other grains, such as corn and wheat, also for export purposes, but soybeans account for the bulk of the processing.

Bunge was founded in 1818 and has grown into an agribusiness and food company with over 22,000 employees in more than 450 facilities in 32 countries around the world. In 1884, Ernest Bunge, grandson of Bunge’s founder, moved to Argentina to take advantage of the growing grain trade market.

Since that time Bunge focused on a number of businesses, and today the company includes fertilizer, agricultural, and food products with operations around the world. Bunge has expanded its Argentine operations via organic growth and acquisition.

By 2010, South America is expected to produce 127 million tons of soybeans—more than the rest of the world combined. As South America’s leading originator and processor of soybeans, Bunge’s industrial facilities will handle much of the processing of that grain.

Back in Puerto San Martín, the crushing plant processes nearly 8,000 tons of soybeans every day.

Additionally, the two berths at the complex’s port facilities have a 3,000 ton-per-hour loading capacity.

This is a high-volume processing plant that operates around the clock.

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When there is a high demand for a product and a process runs around the clock nearly every day of the year, concerns about quality, productivity, safety, and efficiency loom as large as the mountains of soybeans. Bunge Argentina’s corporate goals include maintaining a flexible and efficient organization with a focus on integrity, the customer and farmer, teamwork, an entrepreneurial mindset, and openness and trust. With these goals, taking the Puerto San Martín industrial complex through a lean transformation seemed the logical thing to do.

Carlos Nowik, plant manager of the complex, joined Bunge in early 2005, and his first day on the job coincided with the first day of the plant’s first kaizen events. Fortunately for Nowik, he had been exposed to lean principles in his previous job and so wasn’t completely overwhelmed with the pace and activity associated with the week-long kaizen while trying to learn a new job.

Nowik says, “I was with Unilever in Argentina as production manager and distribution manager in a soap plant. For that reason I was very familiar with continuous process improvements. Unilever had been running a TPM program for some time under the Japanese Institute of Plant Maintenance. So I was pretty familiar with 5S, autonomous maintenance, and things like that. Of course the industry was absolutely different, but I was very happy to start my new job doing things that I already knew.”

Those first kaizen events involved both the crushing facility and the port operations. For the crushing facility, event goals were to reduce the oil in white flakes by 0.1 percent and initiate three safety improvements and one housekeeping improvement. For the port facility, the goals were to increase the meal loading rate and initiate three safety improvements.

These first two events, which were in addition to several other events held at a number of Bunge sites, were a phenomenal success. The crushing plant met all its goals, and the port increased loading rates by 10 percent and met the safety goals. From the six events that were held at various sites over a three-week period, Bunge realized $2.5 million in potential savings and additional margin.

A subsequent kaizen event had a goal of reducing time to restart a line after a shutdown.

According to Ariel Lascano, the production manager who is responsible for the crushing lines, among other things, restarting a line after a long-term shutdown (such as for maintenance) or a power outage was very time consuming. The kaizen event sought to find ways to reduce the time needed to restart a line. The results were extraordinary, but more important according to Lascano was that the improvements were made by the operators, “by us.”

Lascano adds, “These new methodologies have removed our former daily way of working and allow us to increase our work goals [by] searching for new and better standards [of work].”

The dramatic results that can be attained using kaizen have been well documented, but how does a lean transformation really affect a company? Nowik notes that LeanSigma is beneficial because it is more focused and gets results more quickly and effectively.

Enrique Humanes, chief operation officer, adds to that: “The vision you have working with a team is much broader than when working alone.” And that’s the essence of a lean transformation—teamwork and creativity. “It’s really very creative,” continues Humanes. “I’ve found that the people involved are spectacular…because they want to be part of the group and create value.”

Loscano adds, “All the people … know the advantages and benefits of working with a lean production system, and all of us try to eliminate those things that don’t add any value to our daily efforts.”

The creativity engendered by a kaizen event is evident. Consider that for those initial events at Puerto San Martín participants had 107 improvement ideas for the crushing operation and 78 for the port. People’s willingness to make suggestions and then act on them is a “good example of Bunge’s values—commitment, entrepreneurship, and innovation,” says Humanes.

However, enthusiasm alone does not guarantee the success of a lean transformation. Nowik highlights that commitment is the key, and that commitment starts with management. “What I learned at Unilever is that this kind of process goes from top to bottom and it absolutely has to have the great commitment of the top management to support the process. Management has to provide the resources and has to be convinced about the benefits in both the short and long term. Very often this kind of process will fail if the top management or top directors are not convinced about it. When people see the commitment, everything will go better.” Lascano agrees, “The support provided by the management has been crucial. This, added to the positive results, has promoted even more the managers’ involvement.” In fact, at a roll-out of lean at another factory in Argentina all of management was there for the kick off—a great show of commitment.

From the beginning of the process, both Nowik and Humanes have spent a lot of time on the shop floor. Nowik notes that Humanes is a driving force for LeanSigma in the industrial parts of Bunge’s business. “At the end of last year our corporate president also came here to see how it was going on the shop floor,” he adds. “We showed him our achievements, especially in the production area and in the boiler house. He was impressed by the transformation he could already see.”

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CASESTUDY

Visitors to the factory can see the change in the industrial area and the people involved. The long-time employees at the plant, some of whom have been working there for more than 20 years, are now able to present a kaizen and talk in front of 30 people or more. Nowik says, “Those are simple things, but they are very important because kaizen events give them the opportunity to explain their ideas and to show their own work to managers, as well as how their ideas were implemented at the end of the day.” Empowering employees in such a way— allowing them to be creative and proactive—makes a much more satisfied workforce.

When it comes to cultural transformation, Nowik points out that it’s not how long a person has been employed at a plant that will determine acceptance, but rather how open-minded the person is. “Fortunately we have many people convinced about the value of kaizen,” says Nowik. Lascano echoes that sentiment: “Currently, we all comment on kaizen not only as a strong tool to solve problems and to improve our work but also as a cultural change, as a different way of carrying out our tasks.”

“We have more commitment right now in middle management and in the operators themselves on the shop floor,” continues Nowik. “They are moving forward with kaizen, following the results, tracking the action plans, and so on.” Lascano notes that this has led to several positive changes: stronger teamwork, respect for others’ ideas, better interaction among the different areas of the complex, better communication, and an every-day commitment to doing things better.

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Nowik points out that the process should involve everybody—the kaizen promotion officer (KPO) shouldn’t be single-handedly creating change, but should only be facilitating it. Lascano adds that the internal communication that the various areas maintain with the KPO to plan the new events, improve the visual contact and indicators, and apply 5S has been instrumental in the success of the plant’s lean journey.

At Bunge, good early results and corporate goals that promote entrepreneurship and innovation went a long way toward convincing people of the value of LeanSigma. But it’s not all been easy.

“Our main challenge for this year is to work with the line supervisors,” says Nowik. “I have challenged myself to give [the supervisors] more tools and convince them to take a more active role.

They are very absorbed by the routine and doing their job day-to-day and are not so convinced [about the value of the changes brought about by a lean transformation].

“They are key people because they are very close to operators and usually they have great experience in their day-to-day jobs, so it’s very important to us to have them on our side. They are the leaders, so they need to lead.”

According to Nowik, this is where Juan Lorido, the plant’s KPO, has been quite effective. Lorido is a former supervisor, so he knows the people on the shop floor very well and they know him, which is an advantage when he forms the teams for kaizen events. He also knows the other supervisors well, and this has helped him in working with them. His 20 years of service in the plant means he has the experience and knowledge that provides the credibility and influence needed to be successful as a facilitator and leader. As is critical for any KPO, Lorido has great people skills and communicates well with colleagues, shop floor workers, and managers. A successful KPO can be instrumental to acceptance of the lean transformation by the operators and supervisors on the shop floor.

Another key to acceptance is to make sure that operators’ ideas are heard and acted on. Nowik says, “In many cases kaizen projects arise from ideas suggested by operators.” Knowing that their suggestions will be given serious consideration and then acted on has gotten many operators involved in the lean process.

As Bunge looks ahead to the future, it is building on its early successes and counting on its people to drive continued improvement and innovation. Nowik notes that when people visit the factory—which is old and was acquired by Bunge just four years ago—they comment that it looks better and that they see something different going on. These visitors then go out and spread the word to other organizations, which in turn leads to more requests for plant visits. “Outside recognition of the improvements helps us to have the commitment to go forward and get more results and more importantly to sustain the process, which is the main challenge,” he says. Humanes adds, “[Bunge's lean transformation is making] the heart of the organization, our people, well prepared to face very hard challenges in the near future.”

For the future, Humanes would like to see the whole organization, from operations to trading, adopt continuous improvement as a way of life, eliminating waste in any activity Bunge may undertake. Lascano would like to see suppliers involved with kaizen events to lean the value chain, an increasing emphasis on 5S and TPM, and the inclusion of all of Bunge Argentina’s plants in the LeanSigma transformation. With the evident strong support and commitment from both management and employees, it’s likely that Bunge will have no problem surmounting any mountains in its path.

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LEADERSHIP

Lean Leadership: Paving the Way for Success

By Charlyn Daugherty, Executive Lean Advisor, and Bill Schwartz, Exe c u t i veVice President

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Don't tell people how to do things, tell them what to do and let them surprise you with their results. ~ George S. Patton

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BM’s Second Annual Lean Leaders Exchange was held this summer outside of Winston-Salem, North Carolina. The Lean Leaders Exchange was developed as a leadership immersion opportunity to give seasoned lean practitioners an opportunity to take their lean initiative to the next level by providing leadership learning and development to support the lean transformation, as well as networking opportunities. One of the features of the meeting was the single-theme-focused roundtable discussions that took place on Friday. These discussions covered several topics, one of which was lean leadership—a crucial component of any successful lean transformation. Here we share some of the insights from the lean leadership roundtable participants.

Lean leadership requires that the lean initiative be driven from the top and that the entire management team is on board. Great lean leaders share certain characteristics that contribute to their success and to the success of the lean transformation. These characteristics include knowledge, credibility, vision, and passion.

But those characteristics alone do not ensure success. Lean leaders must be supported by senior management, including the CEO. Lean leadership should also be supported by a policy deployment effort at the corporate level—policy deployment is the means by which the company will set the goals and direction of the organization in their lean journey. Other critical issues that can positively affect the lean transformation are the appropriate selection of successful events, support from administration and financial areas as well as the shop floor, and the availability of resources.

Pitfalls exist too, and a lean leader cannot be successful if all of senior and middle management are not committed to the lean transformation. Other pitfalls include lack of knowledge of lean among senior managers, weak involvement by senior management, the attitude that lean is limited only to operations, too great a focus on savings rather than on developing capacity for growth, a lack of ownership of the lean transformation by middle management, no sense of urgency, and a lack of resources.

So what does it take to be a successful lean leader? First, a corporate vision must be developed.

This vision will create a sense of urgency and address competition and how that relates to the survival of the company. This vision should also include a growth strategy—using lean to grow market share and increase revenues—and even consider how lean can be applied to make potential acquisitions successful.

The next critical step is to communicate this vision throughout the company. A lean leader will have the communication skills to engage senior management, middle managers, and shop floor associates. Good leaders will continuously communicate the vision and objectives of the lean transformation.

They will also “walk the walk,” which means leading by deeds, not just by words.

Corporate policy deployment can help with communicating the vision. Senior management develops policy deployment, which will show its commitment to the lean transformation. By codifying the goals for a particular period of time, and the game plan for reaching those goals, a policy deployment plan can be the foundation upon which the lean transformation is built. At a lower level, the policy deployment plan is the basis for creating a road map of strategic projects to be undertaken.

One key component of engagement is training.

Giving people the knowledge and skills they need to support a lean transformation is a basic means of helping to ensure their involvement. Once you give people the skills, then you can reasonably set expectations for their involvement. Establish metrics and expect people to not only track them, but also react to them when abnormalities exist. Training the management team to manage for daily improvement is vital to a successful lean journey.

Another critical choice is how to staff the kaizen promotion office (KPO). Be sure to pick the right people for this important facilitation function and provide them with the resources and tools they will need. A strong KPO can make the difference between success and failure of the lean transformation. The members of the KPO will need your relentless, consistent support, and that means helping to make sure that the scope and objectives of each project are appropriate, assuming a sponsorship role, supporting events and teams in addition to the KPO, and celebrating and rewarding successes.

As a lean leader you will need to track results and ensure that the resources are available for maintaining the changes made and following up on and completing 30-day lists. Use daily “walk throughs” to show your commitment and to keep track of metrics on SQDC boards.

Accountability is another strong factor in a lean leader’s success. You are responsible for not just setting metrics but also performing audits or assessments to review those metrics and solve problems.

Keeping a bunch of statistics is not helpful if those statistics are never reviewed or acted on.

As the lean journey continues, you will need to constantly revisit your vision, update your road maps, and expand participation. Remember that success does breed success, and success will encourage more people to join in—but only if they are made aware of those successes. Never stop communicating. Don’t forget to provide incentives.

Reward success. Share your results, good and bad.

We all know that a lean journey is not without its stumbling blocks. As a lean leader you must anticipate problems and actively work to remove barriers.

Be willing to make the difficult decisions, including removing people who refuse to get on board. At the same time promote and reward your “lean movers.”

Don’t fall into the trap of competing priorities.

This includes both constant shifting of priorities as well as piling on too many projects to enable key ones to be completed in a timely fashion. Stay the course, using the policy deployment document and your vision and road map as your guides. Rotate people into KPO positions as a means of preventing burnout and creating new leaders. Make sure that the CEO and senior management renew their commitment to lean and that the commitment is communicated to all staff. Use your resources to renew excitement and keep the “wow!” factor at the highest level.

Being a lean leader also means planning for the future. If you work to embed lean throughout the corporate culture, the loss of one big lean advocate won’t mean the demise of the lean process. Have a succession plan. Push decision-making down to the people at the first level. Empowering individuals is one of the surest ways to make the lean culture permanent at your plant. Stress creativity before capital.

Establishing a “no blame” culture will encourage people to actively participate, make creative suggestions, and step up to the problem-solving plate.

Lean leadership is a tough but rewarding job. No one is going to be perfect at all aspects of that job, but if you remain open-minded, enthusiastic, and committed, and you’re willing to keep learning, you can be the kind of leader who can drive the success of your company’s lean journey.

The strongest principle of growth lies in human choice. ~ George Eliot

New leaders are waiting to surface in every organization.

Talent is struggling for air. Inventive impulses await your command. I believe it is a leader’s responsibility to release this energy, to sate this thirst, to create “human communities” that promote trust and respect and challenge people to achieve great things and honor their achievements. In return, such leaders enjoy a true wealth that money cannot buy. ~Anand Sharma Characteristics Sh a red by Lean Leaders • • • • • • • • • • • • • • • • • • • •

Open minded/open to change Good listener Enthusiastic, passionate Good communicator Change agent Involved Risk-taker Understands the numbers Consistent, relentless Strategic thinker Sense of humor Assertive Motivated High energy Ethical Trustworthy Values people C o m f o rtable dealing with people at all levels Patient Knowledgeable about the pro c e s s

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STRATEGICVISION

Strategic Distribution Channels: A Partnership to Deliver Value

By Gary Hourselt, Vice President, TBM In t e rnational and Strategy Practice

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Gary Hourselt

while ago, Don Fites, former CEO of Caterpillar, Inc., said that one of the most difficult challenges facing manufacturing executives is distributor relationships. Today, that may be an understatement, even if for different reasons.

If your company manufactures a product that it doesn’t sell directly to the people who use it, then you have independent dealers, distributors, retailers, catalog houses, manufacturing representatives, or a combination of those doing the selling for you. You probably consider these operations as your customers—most likely your primary, most important customers. They are the volume buyers. The better they perform, the more you sell. They grow, you grow. Or do you? You may or may not find your top line growing, but in any case your bottom line is getting squeezed and your prices are under increasing pressure. We see it too often. Today, with competitors everywhere on the planet, these primary customers of yours are going price hunting. You are at their mercy. They are keeping their margins at your expense. They won’t stop as long as there is a competitor of yours out there who has a substitute product with a better price. You may think you’re safe if you have exclusive arrangements with them.

Don’t be fooled. This price hunting will often be disguised as increasing warranty claims, demands for additional product features for too little or no increase in price, or simply constant demands for lower prices in order for them to compete.

If this is happening to your organization, how can you stop it? You must turn this tide or be destined to compete only on price, which will turn your products into commodities and your organization into simply the lowest cost producer— one that is increasingly unable to invest in people, new innovation, and new growth. In other words, you will be simply a generic competitor with either smaller margins or shrinking revenues, or both.

If this is happening to your organization, here are seven steps you must take now to turn the tide.

Step one: Start thinking of your dealers, distributors, retailers, catalogue houses, or manufacturing representatives as distribution channel partners rather than customers. They must partner with you to bring the highest value to your real customers: those who use your products. You and your distribution channel partners can both win, but not at each other’s expense and certainly not without adding true and high value for the real customers.

Step two: Take an inventory of what these distribution channel partners actually do. Don’t be satisfied with general descriptions like “build relationships with customers” or “reach customers you cannot.”

List specifically what they do—the actions they take and the processes they use to build these relationships, reach these customers, and so on.

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Step three: Go listen to the “voice of the real customer.” Organize cross-functional teams of people in your own organization to work diligently and consistently to find out which product features and services (key point) those who use your products value and which they do not. Go visit them. Ask them general, open questions about what makes them more or less successful; what makes them more or less profitable; what makes them more or less happy; what keeps them awake at night. Observe them. Above all, listen to them. Call them on the telephone. Read their web sites. Make a list of the most significant factors of competition you uncover and identify which are highly valued and which have low value for your real customers. Create real intimacy with those who use your products.

Step four: Go back to the specific inventory of what your distribution channel partners actually do today.

Armed with your voice of the real customer data, decide which of the actions and processes that the distribution channel partners do are of high value to the real customer and which are not. If there are any activities and processes being performed that are of high value for the real customer, decide then how much the customer should be willing to pay for each of those value-added actions and processes. Here’s the real test: Would the customer be willing to pay for them at all?

Step five: Using the same inventory of what your distribution channel partners actually do today, decide what they do that is of real value to your organization and how much you are really willing to pay for it.

Step six: Reduce or eliminate the activities and processes that your distribution channel partners actually do today that are of little or no value to your real customers or to your organization. At the same time, find ways to elevate the things, if any, that your distribution channel partners actually do today that are of high value to your real customers.

Step seven: Together with your most interested distribution channel partner, create product and service bundles that are of high value to your real customers based on what you have learned from them.

Coordinate roles based on the strengths of your organization and the strengths of your most interested distribution channel partner. Above all, do expect your customers to pay for high-value product and service solutions, and do not pay your distribution channel partners for anything that does not provide value and certainly do not ask your customers to do so.

If you become intimate with your real customers and their businesses and align your own organization and your distribution channel partners with what your real customers value highly, you will turn the tide.

FUTURES

Culture Change: The Role of Policy Deployment

By Mike Ca l d well, Senior Management Consultant

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s there a connection between successful organizations and their method of communicating the strategic direction of the business?

In our interactions with workers and the managers who guide them, the goal is always to help provide them with whatever it takes to maximize their effectiveness and productivity. Sometimes this means that we become a communications link between the goals of the organization and the activity on the shop floor.

It is sometimes amazing to me the disconnects that exist at all levels of an organization. How can a business ever dream of being successful, when the direction it wishes to go is unclear to all?

Employees are the not-so-hidden, but so-oftenoverlooked, best resource a company has. You can build the finest facility and equip it with the most up-to-date technologies, but if you put in place a workforce that is untrained, disjointed, and disillusioned, you have nothing. It is imperative that wherever we go, there must be an assertive, very visible process in place to include employees in a concerted work process and product flow.

This concerted effort of inclusion starts with policy deployment from top management. Policy deployment means identifying and qualifying special goals for the organization for the coming year. Each level and each unit of the organization shares in the realization of the means to achieve these overall objectives in a timely, doable way. Once the company’s policy deployment goals have been communicated throughout the entire organization, each unit within the organization develops its own plan of how that unit will operate to help achieve the goals. You can’t expect the workers on the shop floor to help meet company goals if they aren’t aware of those goals and the role they play in helping to attain them. If you tell them what the goals are, then they can use their creativity and ingenuity—already in bloom thanks to the organization’s lean efforts— to work together for the company’s profitability and growth.

Mike Caldwell

There is great wisdom in the belief that “People support what they help to create.” In a carefully and purposefully crafted environment, this is not only possible, but very doable and very attainable. It also takes a great deal of trust.

Associates deserve to understand the expectations and outputs of their part in the process. Once they grasp some key fundamentals such as lean manufacturing, how to participate in kaizen events, the intrinsic nature of quality in all aspects of their work, and how to optimize visual management tools, much can be accomplished. When they are able to connect how these ultimately affect the company’s goals for the year, they will understand their personal role in helping to meet those goals.

In this way a company can use policy deployment to help drive cultural change. Policy deployment starts at the top. Just as with a lean transformation, support and direction from the top help to drive the process and better ensure success.

Communicating those goals to everyone in the organization and then helping everyone to understand how they can help push the culture change. This is employee empowerment, and the rewards are many, from the sense of satisfaction and participation the employees feel to profitability for the company.

The bottom line is that policy deployment will help establish and maintain organizational culture change.

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TECHTALK

Abnormality Management and Response

By Sam Stevenson and Noel Temple, Senior Management Consultants

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bnormality management is a topic we need to be more in tune with if we are to become better managers. Webster’s New World Dictionary defines “abnormality” as an abnormal thing or event or the quality or condition of being abnormal. Abnormal is defined as not average, not typical, and not usual. An abnormality is also any deviation from standard operations.

A good part of our days as managers is spent battling such things as not having material, having the wrong material, or having defective material, not to mention not having enough people to do the job or having to wait for decisions to be made by people in the quality or engineering departments. This is only a small part of the firefighting we do—and yet firefighting, dealing with the “normality” of abnormality, takes away time that could be used to train operators, perform continuous improvement activities, and meet daily customer demand. Firefighting seems to have become a normal part of our lives, an accepted practice, when in fact it should be considered an abnormality. Anything that prevents an operator from doing his or her job the way it was meant to be performed is an abnormality, including machine breakdowns and process breakdowns. An outsider can easily see the abnormal, but for those of us who deal with the day-to-day supervision of running the business, the abnormal becomes the normal.

We have visited numerous firms that seem to view firefighting as a part of life in the world of manufacturing. How many times have you watched an operator struggle with defective parts from a supplier, either internal or external? How many times have you watched operators leave their work stations to get the right parts from the store room? How many times have you had to scrap a batch of parts?

How many times do schedules change mid-cycle?

Think about these things as you read through the following example, but don’t feel like you’re alone— we see this in most of the firms we visit.

While touring a widget facility with the supervisors and management team, I notice an operator struggling to assemble her widgets. After several minutes she realizes one of the components is defective, sets the part aside, and retrieves another part to complete the operation. What surprises me is that not one of the managers or supervisors takes any action to assist the operator. One of the supervisors states that this happens all the time and they have informed their supplier of the problem. When asked how long this has been a problem, no one had a good answer. Most surprising of all was that no one on the management team really understood how big an impact this abnormality is having on the business.

I become even more concerned as we watch the

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operator find another defective part and end up taking precious time out of her day to sort through and find good parts. I look at the hour-by-hour chart and see that targets have never been met. (The hour-by-hour chart must be updated hourly, detailing the abnormalities along with time lost.

Standard work must be in place to define the initialized normal point.) Almost every hour was short of the target by at least ten components.

I ask the management team how they meet their customer demand and am told they work a lot of overtime and add people to the process when they can. My concern now is not so much with the operator, but with the management team’s complete lack of a sense of urgency.

This waste of time and lack of a sense of urgency results from an abnormal activity being allowed to become a normal standard practice or an accepted way of doing business. That the supplier was alerted to the problem is a good thing, but what happened to the follow-up, and why has no one taken any corrective steps to make this a priority?

The operator wasn’t at fault—she was doing the best she could to produce only good product, but the potential for excessive waste is huge, especially if defective product gets mixed with the good product.

Not only is time being wasted, but what happens if one or, worse, more than one defective product is received by the customer?

Management must be able to recognize an abnormality for what it is and respond in a timely manner.

The supervisor, once notified of the problem, should immediately assign someone to sort through the parts to ensure the operator receives only good parts to perform her job. Making the operator sort through her own material adds non-value-added time to her process. Operators are paid to make product; if they’re not making product the company is not making money. Having one person, such as the water spider or team leader, sort parts would be more cost-effective than requiring overtime or adding people to the operation. Adding people simply results in more people performing the same non-value-added activity. Having the right parts at the right time for the operator is also more costeffective than having the operator look for good parts or rework defective material.

Once someone is sorting through the material, the impact of the defective parts on the business can be measured and documented. This gives you some power over the supplier to prove the numbers, as well as creating expectations as to how and what the supplier should be doing to correct the problem.

This will also give the management team some sense of how big the problem is, as well as the real impact on the business.

This is just one aspect of the abnormality management process. We still need to make our factories visual and organized. We need to improve maintenance activities through total productive maintenance to create an autonomous work environment. We need to become real problem solvers and real managers of abnormality.

To do a better job at responding to abnormality, we need to have a response system in place that allows operators to signal when there is an abnormality, which requires an immediate response.

A number of systems exist to allow operators to alert responders to an abnormality.

My favorite system is the andon board, which is similar to a bingo board. Each station on a production line has a number that corresponds to a square on the board. Within each square are three light bulbs: green, yellow, and red. Green means all is well, yellow means an abnormality exists and the line will be down in the next cycle of takt time, and red means the line is down because of an abnormality.

Using an andon or other notification system requires responders with specific roles and responsibilities. First responders, such as the water spider, team leader, or supervisor, should take some immediate action to deal with the abnormality. From there a decision should be made as to whether another level of response is required, such as from engineering, maintenance, quality, or material.

Once the problem and its point of cause have been identified and temporary corrective actions have been implemented, the root cause of the problem must be identified. Once the root cause is determined, countermeasures to prevent the problem from reoccurring need to be instated, with followup to ensure the right things were done for the right reasons.

Most of what has been mentioned here is only a small sample of abnormality dealt with by supervisors on a daily basis. So, how do we become real managers of abnormality? First we need to change how we see our business and understand that what appears to be normal may in fact be abnormal.

Second we need to know the seven major wastes of manufacturing: defects, overproduction, inventory, motion, processing, transportation, and waiting.

Each of these is an abnormality. Then we must put in place the appropriate actions to resolve abnormalities as they happen.(See the sidebar for a list of activities needed to become successful abnormality managers.)

As we transform our companies we must exercise good judgment in a consistent manner to drive the cultural behavior in a positive direction and determine our future business longevity. Part of that good judgment means recognizing and remedying abnormalities. By having measures in place to deal with abnormalities as they happen—empowering associates to act instantly, even to the point of stopping a line, you place value on their judgment, which in turn engenders a sense of responsibility that ultimately will help insure that your processes are the best they can be. That, of course, means greater profit for the company, as well as a better position from which to deal with global competition.

Steps to Ab n o rmality Management • To establish the urgency of timely response to abnormality, the person in the corner office must be invo l ved in the process from the beginning, emphasizing the need to manage abnormal conditions as they arise.

• The area manager must have the authority to summon anyone (horizontal support) needed to i n s u re the abnormality is addressed to the established countermeasure (temporary / p e r m a n e n t ) .

• The area manger and cell leader must check the hour-by-hour chart hourly for target achievement and comments on any abnormal conditions that may exist. (This action should be supported horizontally by mid-/senior-level management.)

• When a violation occurs, the cell leader responsible must make the call (confront the violation)—and must do so in a constructive manner so as to not alienate associates, but to constructively work with them to resolve the violation.

• A quick response to the abnormalities within the area must be standard operating pro c e d u re. A good method of signaling the area leader and manager of the abnormalities from all work stations must be in place and operative .

• Senior staff must frequently visit the shop floor to i n s u re the lean principles are being sustained. They should ask questions regarding the hourly performance and offer assistance.

• Su p p o rt groups (maintenance, purchasing, manufacturing engineering, materials, and so on) must understand that smooth running of production lines is paramount and that they are a large part of the support needed for success.

• Consistency of confrontation is imperative to managing abnormalities, and all levels of management must be involved.

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FIELDNOTES

Standard Work Observations

S

ustaining the results from each kaizen event is a challenge for every organization. One of the tools to help an organization sustain improvements is the standard work observation. Basically, supervisors set aside 15 minutes per day to observe one of their team members performing to standard work.

The supervisor then documents the observations on a “Standard Work Observation Form.” The goal is to observe every team member in rotation over a short time period. Many waste issues and improvements can be identified, as well as potential problems with the previous event. Solutions can then be brainstormed and implemented, thereby increasing the chance for the results from a previous event to be sustained. Several hints: • Schedule the observation for the same time each day. Doing the observations right after a break or after lunch works well because it serves two purposes—the observation gets done, and the operators get used to the supervisor being at a random work station when the employees are supposed to be there.

• Always time the tasks during the observation, even if the complete standard work sequence will not be completed during the 15-minute observation period.

• Make the appropriate changes that were identified during the observation. Doing the observation with no action is a missed opportunity.

Many supervisors think they cannot find 15 minutes each day for the observation, but can a leader really afford not to spend at least 15 minutes per day to identify issues and solutions in their work area?

— Bob O’Briant

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Kaizen and Production Preparation Pay

W

hen the company that had traditionally produced the carpets for all of the vehicles in Nissan’s X61B program, which includes the Pathfinder, Xterra, and Frontier truck, ran into financial difficulties, Nissan awarded part of that business—the manufacture of carpet for the Xterra and Frontier— to Lear. The original company used a “foam in place” method to produce the carpet for the Nissan vehicles. This method involves injecting liquid foam between a heated piece of carpet and a threedimensional mold in the shape of the vehicle floor.

We planned to use a different method of forming the carpets and needed to get the manufacture up and running quickly, efficiently, and for minimal cost.

Lear is an important customer for us, and this Nissan contract accounts for nearly $2 million of our sales, so we wanted to make sure the transition went smoothly. Normally the process of adding the capacity to produce vehicle carpets—from tooling to launch—would take from 18 to 24 months. In this case, Lear worked jointly with us to develop an alternative to the foam in place process, an acoustical/thermal insulator manufacture of recycled textile fibers.

Working with Lear, and using the LeanSigma® methodology of production preparation (2P), we were able to launch this program in about six months. The objective of the 2P event was to achieve the best arrangement within a work area for the Nissan X61B molded floor with the minimum people, machines, methods, and materials; improve productivity and quality; and eliminate waste.

Prior to the 2P event, we had already used kaizen events to create extra capacity in certain manufacturing cells. Kaizen also allowed us to consolidate into a single cell programs that were originally produced in program-specific cells. We also performed a set-up reduction kaizen to cut the time needed to change out tools. Post-kaizen, set ups that had taken two hours took just 30 minutes to complete, again enabling us to create extra capacity.

During the 2P event, we discussed and evaluated automation alternatives, as well as labor costs for several different production scenarios. We also considered a number of different ideas for heating and cooling the molds.

We determined that we could use existing equipment that had been freed up by kaizen events at another plant, thereby avoiding any capital expenditures. We conducted point kaizens on two other cells in the plant to free up two operators for work in the new Nissan cell. Currently, we are producing 60 parts per hour using two operators in the new cell.

By using kaizen and 2P, we were able to meet Lear’s needs in record time and at no additional cost to us. — Roy Heeralall, CI Manager, Janesville-Sackner Group

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