Managing Times Q2 2008

Q2.08

MANAGING TIMES S h a r i n g

S o l u t i o n s

f o r

Y o u r

L e a n

J o u r n e y

Vermeer’s Market-Based Strategy: Strategic Voice of the Customer

6 What is a learning organization

12 Progressive 5S: We’re not talking trash

14 Leveraging lean to eliminate seasonal inventory

PUBLISHER’SNOTE

Lean Leadership and Culture Change

then commit to establishing metrics with which you will track progress, and create incentives to help everyone get there.

T

he success of companies that choose to undergo a lean transformation is catalyzed by passionate leadership and the resulting culture change that serves as the backbone of the journey. A lean leader creates the requisite excitement for a profitable growth across the entire enterprise enabling the proper transformation to take place.

For “lean” to work effectively, leadership must establish the overriding business vision and then communicate it constantly to everyone. In addition, leadership must avoid making the transformation too easy by setting stretch goals that are radical and uncomfortable. Failing to do so sets everyone up for underperformance. It’s better to overreach, fail, and learn from the failure because taking the kinder, gentler road will stifle creativity.

Standard Work One implementation tool—standard work—is a hallmark of a lean company. One element of leadership’s standard work is to communicate continuously—the good, the bad, and the ugly. Another element is to show the vigilance to monitor progress on a regular basis while embedding countermeasures to handle anomalies. Involvement must be both personal and visible to be effective.

Another part of the lean leader’s tool kit is policy deployment. It’s a structured way to execute to achieve the vision by selecting few vital, critical, quantifiable objectives that you must focus on to drive change. You must

Cultural Shift Lean leaders must nurture a lean culture, and it’s hard to drive such a culture change without creating a critical mass of believers.

One way to make the nurturing viral is to develop lean leaders—zealots—within the organization. Zealots are the catalysts who will drive organizational change and growth.

Zealots will take your visions and help infect everyone else with the lean “bug.” Zealots can exist anywhere within the organization, so don’t limit your recruitment to titled managers when seeking them out.

Zealots are willing to step outside their comfort zone, seek disruptive ideas, and look for breakthrough opportunities. They are tenacious optimists and they are your best assets for helping to drive cultural change.

With an enthusiastic leadership team in place as the catalyst for change, your first lean steps must be “narrow and deep.” This will allow you to show the true power of the process. The goal of going narrow and deep is to create change quickly and demonstrate the power of transformation by visible examples. If you’re interested in true culture change across the entire organization, you need to start with small and deep successes or you’ll never create enthusiasm. Over time you can expand on the success to bring change to the rest of the organization. This is where policy deployment can be most useful: it helps you focus. The results from those initial projects can then be communicated across the company and the enthusiasm that is engendered can then be used to build on that highly visible success.

Win–Win Using this roadmap, lean leaders can inspire change, help create breakthroughs, jump-start the process, and mobilize and

empower everyone to make improvements.

It’s a team effort with the ultimate goal of making it work for the benefit of all. When committed leadership at all levels of the organization can sustain a blameless environment where creativity and risk-taking are encouraged, then the culture change that creates competitive advantage will always come naturally.

This issue’s articles touch on many aspects of culture change and competitive advantage, starting with our feature from Vermeer Manufacturing Corporation on changing the dynamics of your business through a market-based growth strategy (p. 2). Part of developing a lean culture means becoming a learning organization and the characteristics of such an organization are described in an article by Joe Panebianco (p. 6). Negative behaviors can work to the detriment of an organization’s lean journey.

Learn how to deal with “bad actors” in “Combating Anti-Synergy” (p. 8) and how your leadership style can affect your business in “The Art of Consistency” (p. 11). For a more practical application to your lean journey, you can also learn about Progressive 5S (p. 12).

I hope that some of these articles will help you to be better leaders in nurturing culture change within your own organizations.

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

Q 2. 0 8

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

Publisher Anand Sharma: a s h a r m a @ t b m c g . c o m Executive Editor William A. Schwartz: bschwartz@tbmcg.com Managing Editor Julie Poudrier: jpoudrier@tbmcg.com Featured Columnists Mark D. Core Carl Deeley Joe Panebianco Gary Rascoe

Bill Schwartz Mike Serena Anand Sharma

Contributors Stacey Aponte-Morris Trudi Frechin Herb Brown Cheryl Groves Martial Durin Angela Scenna Art Direction and Design IONA design www.ionainteractive.com Printing Carter Printing & Graphics, Inc. www.carterprintingnc.com Published quarterly in Durham, NC 4400 Ben Franklin Boulevard Durham, NC 27704 TBM, the TBM logo, and LeanSigma® are registered trademarks of TBM Consulting Group, Inc. If you would like to receive this journal via email, send your vital information including email address to tbm@tbmcg.com On the cover: Vermeer Manufacturing Corporation is driving growth by running a different race—using strategic voice of the customer to determine where needs exist in their current marketplace as well as where entirely new, related markets might exist and then provide solutions for those needs.

Taking the long view that can be gained by using strategic voice of the customer holds the greatest opportunities for true business-changing choices.

LEANCOMMUNITYNEWS

E

ffective May 1, Rainer Borgmann is the new president and CEO of Spudnik Equipment Company in Blackfoot, ID. Former President and CEO Rolf Geier is taking on a major assignment with Continental Brake Systems in Sao Paulo, Brazil. … Joseph Saoud is the new president of Cummins Filtration. Before his appointment as president, he was the general manager of the company’s Cookeville, TN, plant. … Michael Kayser is leaving AMI Doduco in Germany for a new challenge at Rexnord as Vice President of Operations, Europe. … In January, KC Ng was promoted to vice president in charge of lean worldwide for Pulse Engineering. KC is from Singapore, and prior to his promotion was running a business unit for the company. …

Pulse Engineering also recently acquired the Danish company Sonion. Sonion specializes in speakers for cell phones and has operations in Denmark, Vietnam, and China (Suzhou and Dongguan). … At Mattel Arun Kochar, formerly vice president and general manager of Mattel Jakarta (India) has been promoted to vice president and general manager for all of Mattel’s Asia sites.

Arun is replacing David Louis, who is retiring, in this position. … TBM has also hired several new consultants and staff members.

John Alford has joined the TBM Institute as a senior trainer and design specialist.

Dennis Donahue is a new U.S. consultant.

Chandra Majjagi is a new consultant in TBM’s India office, and Sammy Leung is a new consultant in the China office. Lily Jia has also joined the China office as an administrative and accounting assistant. Jeff Haswell joined TBM as web designer.

Raymond Morisod has joined the TBM Europe as Accountant and Payroll Administrator.

Managing Times | Q2.08 www.tbmcg.com/news/newsletter.php

1

CASESTUDY

Vermeer Market Based Strategy

By Mark Core, Vice President, Forage Solutions and Corporate Marketing, Vermeer Corporation

In 1943, at the height of World War II, American farmers were facing a shortage of farm help. Farming at that time was still a

“While interacting with customers

very labor-intensive industry. The shortage of workers pushed some innovative farmers

and industry specialists, we collect

to find better ways to work more efficiently.

One of those farmers was a man named

insightful information uncovering meaning and value impacting

Gary Vermeer from Pella, Iowa. To help his operation, Vermeer invented a mechanical

Vermeer was testing a large round hay baler prototype—a product that changed the way

future decisions and strategies that

wagon hoist that made unloading a grain wagon quicker and easier.

farmers harvested hay to this day.

Today, the company has grown from a

drive growth.”

It didn’t take long for other farmers in the area to ask Vermeer to build hoists for

small machine shed to a multimillion dollar global company with more than 2,000

their operations as well. Five years later, with the support of his cousin Ralph, Gary

employees, a 1.2-million-square-foot manufacturing footprint and a diversified

Vermeer built the idea into a business—and Vermeer Manufacturing Company was born.

product lineup that spans multiple industries and includes grinders, brush chippers, stump

In the years that followed, Vermeer continued to listen to people and look for

cutters, compost turners, horizontal directional drills, trenchers and hay balers, to

new ways to help farmers work more efficiently. The company introduced the

name a few.

Pow-R-Drive hammermill to help farmers grind grain using their tractors’ power

A Culture of Innovation Vermeer’s culture has always been one

take-off (PTO). PTO-powered irrigation systems and trenchers followed and helped

of innovation, but for its first forty years, the process was very informal. As markets

the company open international markets.

In 1972, during an early-morning walk

evolved, the company became a high market share manufacturer competing in mature,

with a long-time friend and farmer, Gary learned that his friend was planning to get

relatively low-margin industries. It wasn’t until the 1980s and 1990s that Vermeer

out of the cattle business because of the labor required to put up hay. Within weeks,

determined it was important to start developing a more focused process for innovation.

It started by establishing the company’s 4P philosophy of principles, people, product, and profit. To support this philosophy, Vermeer embraced the principles of lean manufacturing, holding its first official kaizen event in 1997 and completing 500 of these events within three years. In 2001, the company introduced lean to its distributors and suppliers. By 2003, the company had completed its 1000th kaizen event.

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Implementing these operational efficiencies helped Vermeer weather a significant downturn in the economy in the early 2000s. Following years of unprecedented growth, a devastating downturn in the global telecom industry resulting from the dot-com bust caused a significant decrease in Vermeer sales—and required the company to reduce its workforce by nearly one-third.

The lessons learned from that time period prompted Vermeer to develop new strategies to help the company both grow and diversify its product offering.

The new strategies helped Vermeer identify the sweet spot between operational effectiveness and strategic positioning (being better and being different). This approach has transformed the way Vermeer innovates today. Today’s approach is market-driven, and Vermeer calls it “Market-Based Strategy” (MBS). Vermeer’s MBS process goes beyond tactical-based research processes to help identify new opportunities so that it can be the first to the market with truly innovative products and other solutions.

industry and market opportunities. They talk to industry experts in government, trade, and universities. They research published data. They investigate potential strategic competitors. And, they talk to customers—those who own Vermeer products as well as those who don’t. Then they return with a wealth of information.

Because Vermeer is a privately-owned company, their long-term investment in this process—which can sometimes mean sending a team of Vermeer employees overseas for weeks at a time researching potential opportunities—isn’t hindered by short-term shareholder profitability goals.

Often a return on their investment can take several years. Sometimes, there is no financial return at all. Regardess, Vermeer believes (and their success in introducing innovative products has proven) that the investment is worth the potential reward.

Strategic Voice of Customer—The View from 30,000 Feet Vermeer starts the process by looking at the broad picture of an industry or market, identifying trends, needs, strategies, and opportunities for broad-scale technology and business investments. This phase of the process is called the strategic voice of customer (SVOC). Vermeer employees from different backgrounds are brought together and charged with investigating potential

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3

CASESTUDY Value Innovation Curve Somewhere between collecting

It’s not always product features that offer value to the end customer. In fact,

information and data and turning it into a new, profitable opportunity, there is a phase

through the VIC phase, Vermeer has often identified opportunities like parts availabili-

Vermeer describes as the “value innovation curve” (VIC). This visual representation

ty, maintenance issues, safety, training, or cost of operation as the key value offerings.

rates the key factors of an offering and compares them to the actual offerings being

Using this information, Vermeer strives to develop and market an offering that matches

made by competitors in the market. By addressing what customers deem as the most

the end customer’s needs.

important factors, Vermeer is able to develop an offering that brings value to the end

Product Innovation—Product Voice of Customer and House of Quality

customer. Ultimately, the question in the VIC process comes down to how Vermeer

Not every idea makes it off the drawing board. At Vermeer, the ideas that do are

can help their customers be successful.

defined and refined in a process described as product voice of the customer (PVOC) and house of quality (HOQ). Much of the company’s product development happens here, still using a cross-functional team with members from areas such as engineering, marketing, product safety, production, procurement, service, and parts distribution.

New product concepts are developed with features designed to match SVOC and VIC discoveries. These concepts are then taken to the field for feedback from small groups of Vermeer dealers, customers, and noncustomers. Based on this outside feedback, product design enhancements are strongly considered for incorporation into the product design.

Refining Quality—Quality Voice of Customer Launching new product can present a variety of difficulties. One example is that although Vermeer products are tested during the prototype stage, real world use by end customers can present different circumstances than those experienced during prototype testing.

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What Is Value Innovation? Pursuit of Radically Superior Value and Low Cost

ducted more than 7,500 customer telephone interviews. The interviews are designed with a simple single-question philosophy primarily used to determine a customer’s intent to repurchase. But, beyond the obvious benefit of identifying improvement opportunities, the CSI process also puts Vermeer employees in touch with end customers in a way that helps employees understand the importance of customers and their feedback.

Does It Work?

While this process-driven, buttoneddown approach to innovation developed by Vermeer Corporation may seem methodical and complicated, it’s not too different from the approach that Gary Vermeer took with many of his early inventions.

But, does it work?

In the past few years, Vermeer has successfully launched a variety of new products, made several key strategic acquisitions in growing markets, and helped redefine some niche markets based on feedback received through its market-based strategy. And, with in-depth insights into evolving industries and high-growth markets, Vermeer is poised to take advantage of opportunities that its competitors may not have seen coming several years ago. Vermeer Corporation’s

The innovation process used at Vermeer depends on gaining feedback from the

ment by seeking out customer feedback— both positive and negative—after each new

investment of implementing its marketdriven approach is likely to pay dividends for

field—through dealers and end customers.

Vermeer describes this “listening” phase as

product launch. This “listening” phase of the innovation cycle is unique in that it brings

the company well into the future.

quality voice of the customer (QVOC). The Vermeer product design teams use this feed-

together employees from across the company, from production to executive manage-

back to continually find better was to enhance the product.

ment to sales to engineering and beyond into a group “lab” setting to determine a

Determining Customer Satisfaction

product’s customer satisfaction index (CSI).

Participants make approximately 300

Vermeer takes its Market Based Strategy even one step beyond final product develop-

calls to Vermeer customers every month. To date, more than 200 employees have conManaging Times | Q2.08 www.tbmcg.com/news/newsletter.php

5

ACCELERATEDLEARNING

What Is a Learning Organization?

By Joe Panebianco, Director and Team Leader, TBM LeanSigma® Institute

At the start of every kaizen event I ask

Joe Panebianco

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the group, “What are your expectations?”

The most common answer is, “To learn.”

They may say to learn about the process that we’re going to improve, to learn more about an area of the company that they aren’t familiar with, or to learn about the principles of the Toyota Production System and how they are used to improve a process.

As a facilitator, my expectations are not only to achieve the business objectives of the event, but to help the group learn so that they know the process and the principles, and can make improvements every day, thereby creating continuous improvement.

The common thread in all of these expectations is to learn. Learning is an essential part of continuous improvement. As Jeffrey Liker in The Toyota Way (p. 251) states, “Of all the institutions I’ve studied…I believe Toyota is the best learning organization.”

Jeffrey Liker in The Toyota Way shares the 14 management principles that have helped Toyota become the largest and most profitable car company in the world. Principal number 14 is: “Become a learning organization through relentless reflection and continuous improvement.”

But what is a learning organization? Peter Senge in his book The Fifth Discipline describes learning organizations as “organizations where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together.”

Peter Senge identifies five disciplines that are key to building a learning organization—shared vision, personal mastery, team learning, mental models, and systems thinking. Though other characteristics of learning organizations have been written about, most still draw upon the initial ideas and concepts that Senge described.

Shared Vision All groups or organizations that have achieved greatness have had goals, values, and missions that are deeply shared throughout. Don’t mistake “shared vision” with a company’s vision or mission statement— they may not be the same. Shared visions motivate and drive people to excel, not because the boss tells them to, but because they want to.

Many leaders have a personal vision statement they never articulate to the organization. These types of leaders may still be effective in their roles because they are charismatic individuals and motivate people to follow them. When they leave the organization, the motivation of the employees will leave, too. In order for an organization to have a common commitment, focused on long-term results and achievements, its members must have a shared vision that lasts well beyond the tenure of any one individual leader. A great example of this is when John F. Kennedy said in 1961 that America would put a man on the moon by the end of the decade. This single statement became the shared vision motivating a nation to achieve its goal even after it lost its leader.

Personal Mastery Personal mastery is the individual’s motivation to learn and become better, much as a craftsman or artist is driven to master his discipline. In a learning organization, personal mastery tells us that we are committed to a lifetime of learning and are able to realize the results that matter most to us. An organization’s ability to learn is determined by its individual members’ desire to learn— either the drive to develop, improve, master, and excel exists or it doesn’t. For that reason, you need to have individuals that are truly committed and motivated to the shared vision.

“The ability to learn faster then your Team Learning Examples abound of sports teams that although filled with individual stars still have a losing record. Likewise, there are management teams that are staffed with high performing individuals that produce poor earnings or bankruptcy. “When teams are truly learning, not only are they producing extraordinary results, but the individual members are growing more rapidly than could have occurred otherwise.” (Senge, p.

9) This is how individual learning becomes a mechanism for team learning. In effect, team learning becomes a force multiplier of personal mastery, with one person’s lesson quickly being passed on to the entire organization, accelerating the learning and improvement process exponentially.

Mental Models Mental models are the assumptions and beliefs that are the foundation for how we interpret the world around us. Mental models also drive our behaviors. In most cases, we aren’t even aware of our mental models.

It can be something as simple as making an assumption about the type of person someone is based on how that person is dressed or wears her hair. Mental models cause us to take a certain action or to take no action at all. Here we must be willing to look inward, examine and challenge our mental models, and be open and willing to change. A fundamental tenet of the learning organization is that the act of looking inward and examining our core thoughts and beliefs is an important tool for furthering personal mastery and continuously improving ourselves.

Systems Thinking The final characteristic of a learning organization is that the organization utilizes systems thinking. Systems thinking involves taking a macro look at the world or an organization, rather than only seeing discrete, individual units or events. Through this broad perspective, we can observe patterns and cycles in an organization—how all individual members are interrelated and influence each other—rather than viewing events as isolated occurrences or separate parts. Finding this interrelationship of seemingly unrelated activities requires a systems thinking approach. It requires a systems perspective to comprehend how every event within an organization helps shape the future of the organization and channel those collective events into lessons learned on the path toward the shared vision.

As one seasoned Toyota manager commented after hosting over a hundred tours for visiting executives, “They always say, ‘Oh yes, you have Kan-Ban systems, we do also. You have quality circles, we do also. Your people fill out standard work descriptions, ours do also.’ They all see the parts and have copied the parts.

What they do not see is the way all the parts work together.” (Senge, p. 11)

competitors may be the only sustainable competitive advantage.”

—Arie De Geus, Royal Dutch/Shell (i.e., batch vs. flow production). No one individual is capable of producing the results that a full kaizen team produces, but by assembling a team of employees who are each responsible for discovering the current state and sharing what they’ve each learned with the team, the team achieves results that surpass anything one individual could have accomplished on his own (personal mastery and team learning.) During a kaizen event, no project area can be considered in isolation—before changes are made, the team must understand the interrelationships and identify how a change will impact other areas of the organization (systems thinking.)

By continuing these practices beyond a kaizen event and applying them to all aspects of your business, you’ll have taken the first steps to becoming a learning organization.

Now I know what you’re thinking: shared vision, personal mastery, team learning, mental models, systems thinking—that’s a hell of a lot to develop, implement, and spread throughout our organization. We will never be able to adopt all those practices—or by the time we do master those, we’ll be so far behind that what’s the point? But what you don’t realize is that the entire kaizen week is a microcosm of a learning organization. The scope and objectives for the week is the shared vision; the mental models are the tools of the Toyota Production System Managing Times | Q2.08 www.tbmcg.com/news/newsletter.php

7

STRATEGICVISIONING

Combatting Anti-Synergy

By Gary Rascoe, Senior Management Consultant and Trainer, TBM LeanSigma® Institute

W

Gary Rascoe

If you consistently address issues early on, before anti-synergy can rear its head, you will enable your company to maintain a culture that’s consistent with a lean organization.

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e often talk about the advantages of synergy: 1 + 1 = 3 (or more). Synergy is considered a good thing because the sum of the parts is often greater, and better, than the individual parts themselves. But what about what I call “anti-synergy?” If synergy is defined as above, then we can define antisynergy as when the negative parts add up to a greater negative as a whole than they do individually; that is: –1 + –1 = –3 (or worse).

Too often organizations will procrastinate about dealing with a bad situation. Sometimes they rationalize the inaction by thinking that the problem person or situation will eventually be “dragged along” with everyone else— they’ll eventually see the light or do the right thing if you just give them enough time. The t ruth is that the sooner an organization can deal with a problem person or situation, the better that organization will ultimately p e rform. By dragging their feet about dealing with problems, these organizations inadve rtently create a negative energy (or synergy, if you will) that tends to multiply its effect ove r time and drag the organization down.

He re’s a relatively simple example from a company where I worked years ago. This p a rticular company had several campuses and “satellite” buildings. In one of these buildings, personal safety equipment, specifically eye and hearing protection, was required. The people who worked in this building were highly skilled and essential to the business. At some point, one of the workers in this building decided to stop wearing his required safety equipment. Soon others began to f o l l ow his example. This one individual was having an anti-synergistic effect on the entire g roup of operators in that area. By his example, he was in effect encouraging others to forgo using needed safety equipment.

When something like this happens, the leadership of an organization has two choices.

It can look the other way and hope that the problem will correct itself and further problems won’t arise, or it can act to stop the problem in its tracks. Often, leaders will take the first approach. But as in this example, what usually happens is the problem becomes magnified as more and more people start to b e h a ve in the unacceptable way. They see one person “getting away with it” and can then justify doing the same thing themselves.

In this particular case, the problem e m p l oyee was essential to the business and one could say that fact put leadership

“between a rock and a hard place.” But there are times when it’s appropriate to take a risk in order to rectify a problem. My boss and I went to that building and called in one of the people who was refusing to use protective equipment. We told him “If you leave this room and go back out on the floor without your hearing and eye protection, you can keep walking.” This was a tough call to make, because had he kept walking, his loss would h a ve had a significant impact on the business.

But what my boss recognized is that he had to take a stand and stop the anti-synergy in its tracks or he would be opening up the organization to all sorts of additional problems. Ignoring the problem was simply the first step on a slippery slope.

Sometimes they rationalize the inaction by thinking that the problem, person or situation will eventually be “dragged along” with everyone else. They’ll eventually see the light or the right thing if you just give them enough time. The truth is that the sooner an organization can deal with a problem, person or situation, the better that organization will ultimately perform.

As my boss proved that day, you must stand up for what’s important, even if—as in this case—it might hurt you in the short term. Letting bad things go unchecked will ultimately lead to a culture that’s antisynergistic, and that’s the opposite of what an organization should be seeking.

Allowing one operator to refuse to wear protective equipment sent the message to everyone that not following the rules was okay. Consider the situation where one person refuses to follow 5S or standard work.

What does that do to productivity and, more importantly, morale? What does it say about your culture? What sort of message is it sending to the rest of the organization?

It’s never easy to confront a person who is refusing to cooperate, but it doesn’t get any easier if you choose to ignore it and hope it will go away. In fact, delaying action allow s anti-synergy to take hold, and before yo u know it, what was potentially a small problem (i.e., one person) will soon become a much larger one. If you consistently address issues early on, before anti-synergy can rear its head, you will enable your company to maintain a culture that’s consistent with a lean organization. You will also dramatically increase the speed at which your positive culture change, and your lean journey, will take place.

Blue Ocean Strategy:

BOOKSTOREAD

How to Create Uncontested Market Space and Make the Competition Irrelevant

By Bill Schwartz, Executive Vice President, TBM Consulting Group, Inc.

R

eaders of this column who are also long-term partners with TBM will re c o g n i ze some of the value innovation tenets presented in Blue Ocean Strategy (W. Chan Kim and Renée Mauborgne, Ha rva rd Business School Publishing Corporation, Boston, MA, 2005).

One of TBM’s oft-repeated mantras is that companies should leverage lean for growth by learning to run a different ra c e. We tell our p a rtners that once they have gotten their house in order by using lean principles and k a i zen, they are ready to position themselves for growth by using value innovation. Bl u e Ocean Strategy provides well-reasoned and understandable explanations on how to ru n that different race.

I consider Blue Ocean Strategy required reading for managers who want to become more competitive in their marketplace—who want to understand how to compete to win.

This is not a book about lean or the Toyota Production System. It’s about strategy and understanding your market and looking at your market differently. The authors show you how to step away from the “red ocean,” where there’s blood in the water as competitors fight over existing markets and products, and find the market segments and product o p p o rtunities that were previously unknown, the “blue ocean.” They want you to think about the blue ocean—a vast, deep, wideopen space where the opportunities just may be endless—where companies should be choosing to compete.

Kim and Mauborgne emphasize the idea of eliminating obsolete or aging qualities in products, reducing things that people don’t want or need, and raising features that people c a re about or that aren’t currently covered by existing products. These concepts—strategic voice of the customer and value innovation— a re the cornerstone of this book.

Pa rt of what makes Blue Ocean Strategy so readable is the well-presented examples used to illustrate the authors’ concepts. Consider Ringling Bros. and Barnum & Bailey Circus, which for more than a hundred years has defined what a circus is and should be.

According to the authors, most competitors of Ringling Bros. were simply smaller versions of Ringling’s three rings under the big top, with star performers and animal acts galore. The authors also note that the circus i n d u s t ry was one in decline. Children had lots of other forms of entertainment and,

frankly, circuses have simply lost some of their charm and attraction for young people and adults alike.

Then in 1984, a group of street performers in Canada created a new type of circus: Cirque du Soleil. Cirque du Soleil achieved financial success in less than one-fifth the time it took Ringling Bros. to do so. Why? C i rque du Soleil did not compete with Ringling Bros. and Barnum & Bailey.

Instead it created uncontested new market space that made the competition irre l e vant. It appealed to a whole new g roup of customers: adults and corporate clients pre p a red to pay a price several times as great as traditional circuses for an unprecedented entertainment experiences. (p. 4)

What Cirque du Soleil offered was performance that were much more refined, choreographed, and well-staged. They added music, light, and dance to appeal to all the senses, and removed vendors in aisles and animal acts.

Another probably more familiar example is the strategy used by Southwest Airlines to reinvent airline travel through the use of value innovation. Southwest looked at what most airlines offered and compared those offerings with what travelers really wanted. Southwest found out that travelers wanted to save time by flying but also wanted the greater schedule flexibility and lower cost that could obtained through automobile travel. Southwest’s blue ocean strategy, removing those offerings common to most airlines that customers placed low value on and concentrating on the highvalue items—speed, flexibility, and economy—allowed Southwest to change the face of the airline industry.

My copy of this book is thoroughly dogeared and underlined. It’s an easy read and ve ry logical. We often hear that some of the best ideas are simple ideas, and this is one of them. If you want a greater understanding of what it means to be a value innovator and how to move your lean journey to the next step to run a different race, add Blue Oc e a n Strategy to your library. It’s a book for lean practitioners and value innovators to live by.

If you have any comments regarding this review or this book, please forw a rd them to me at bschwart z @ t b m c g . c o m .

Bill Schwartz

“If you want a greater understanding of what it means to be a value innovator and how to move your lean journey to the next step to run a different race, add Blue Ocean Strategy to your library.”

– Bill Schwartz

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9

LEANCHAMPIONS

Barb King, President of Landscape Structures

By Anand Sharma, President & CEO, TBM Consulting Group, Inc.

Landscape Structures Inc., a global provider of commercial playground equipment, announced the passing of its president, Barbara “Barb” King on March 4, 2008. King died at age 61 at home with her family, after a seven-month battle with cancer.

Barb co-founded Landscape Structures with her husband, Steven King, in 1971.

The Kings founded the company in their garage in Golden Valley, Minnesota, with a $1,000 loan that they used to buy a radial saw and pay an attorney for incorporation.

Since then, the family-owned company has introduced numerous playground innovations that revolutionized the playground as we know it. Barb headed up the sales and marketing area, and oversaw the manufacturing operations of the company, working closely with staff on a day-to-day basis.

I first met the Kings nearly eight years ago when Landscape Structures embarked on its lean journey, which the company named COOL, for “Creating and recognizing Opportunities to improve, Opportunities to grow, Learning as we go, and loving what we do!”

Barb advocated an open, friendly and empowering culture at Landscape Structures that focused on continuous improvement.

She ensured that every one of the more than 300 employees had an equal voice in suggesting change, improvement, and progressive action for the company. Barb was a very familiar face, both in the office and out on the shop floor, and always had a smile for all.

“Barb’s death is, first of all, a tragic loss for her family, and for all of us at Landscape Structures. She was a tremendous part of who we are as a company, and had an incredible passion and zest for everything she did. She was unfailingly optimistic, and her curiosity and love of learning and life were contagious,” states Vice President Pat Faust.

“It was amazing—anyone who had even the briefest interaction with her was profoundly affected. To say she’ll be missed is a huge understatement.”

Barb was a true lean leader with very high work ethics and deep concern and care for the customers and the associates at Landscape Structures and the local community.

Her leadership and passion will be deeply missed by the lean community at large.

Parts of this text were taken from the press release issued by Landscape Structures regarding the death of co-founder Barb King.

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Managing Times | Q2.08 www.tbmcg.com/news/newsletter.php

FUTURES

The Art of Consistency

By Carl Deeley, Lean Value Chain Practice Leader, TBM Consulting Group, Inc.

While discussing the merits of policy deployment with one of our long-term clients the topic of management “style” and “personality” came to the table. This is a common discussion point with corporate and site leadership teams, so the next day on my flight to Washington I reworked the discussion points and recalled my own experiences that helped shape my opinions on what can be a very emotional subject.

When I first entered the factory environment I had a boss who was truly a “hard piece of work,” as my father says. He seemed at the time to be displeased with just about everything, but those things he was pleased about were appreciated by everyone.

Several years and bosses later I reported to someone whom I at first thought would be the perfect manager: accessible, approachable, and apparently not interested in getting involved in the details of my responsibilities.

Within a short period I was looking for a transfer. Why? Because under this manager guidelines and codes of conduct were not clear—the only constant was uncertainty and change in direction, both of which were frustrating and disabling to my effectiveness.

From that point on I took the stance of being predictable to the people that I worked with. I call this the art of consistency. It’s an art because to achieve it you have to practice, to interoperate a situation and align your actions to the values and codes of conduct in which you believe.

I found that being predictable in my approach helped my peers and, more importantly, my direct reports to be more effective. When a manager uses a consistent approach, it allows people to take action immediately rather than wait for direction.

I’m of the opinion that someone who is part of an organization should know how to react to any situation. This ability to react should not be confused with having “the answer;” instead it means that everyone knows how to move forward in a way that is consistent with the rest of the organization’s values and expectations.

Lean managers focus on process, and this includes maintaining an improvement culture. Change will more likely be sustained when the individuals affected have

information that helps them conclude that the change is positive and beneficial. It’s the manager’s responsibility to keep the information flowing.

When you’re promoting continuous improvement and creating an environment for change, you also have to provide a firm anchor point—a stable foundation from which the organization can work. I have found that consistency in how you do things provides that stability, and this consistency includes your decision-making processes like policy deployment, performance metrics, daily workplace reviews, and your change methodology, such as kaizen and Design for LeanSigma®. Being consistent in insisting that change is made through cross-functional or team-based processes will help you unite the organization and keep emotions in the workplace positive.

All of this needs to be backed up by a clear set of values. If your organization hasn’t published a set of corporate values, then take the time to communicate to your peers and reports what’s important to you. You can’t rely on the intuition of your fellow work associates to determine your expectations; you have to communicate regularly and demonstrate those values and expectations through your own actions. Remember if you walk past an issue without responding then that makes you part of that issue. Knowing and doing are two separate things, and a lean leader must expect and demonstrate both.

Management style reflects who you are as an individual, and there is no right or wrong style, but it’s still important that your preferred style melds well with your work teams. You must know and master yourself first and then decide if your organization’s and co-workers’ values, styles, and personality are a reasonable fit. If so, then you’ll likely be able to help the business and its people grow and move forward as a learning organization on its lean journey.

I am always interested to hear the experiences of others in a bid to understand more about what has worked and hasn’t worked.

Please contact me through e-mail at cdeeley@tbmcg.com if you would like to share your experiences or would like to discuss issues in the field of management facing you today.

Carl Deeley

“It is difficult to be always the master of oneself” —Gautama Buddha

Managing Times | Q2.08 www.tbmcg.com/news/newsletter.php

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TECHTALK

Progressive 5S: We’re Not Talking Trash

By Mike Serena, Ed.D., Managing Director, TBM LeanSigma® Institute

W

Mike Serena TBM recently introduced Essential Lean Learning—a comprehensive online training program for essential lean learning. Online training is an effective way to build awareness and understand across a broad base of employees. Visit www.tbmcg.com/ELL to see the full eLearning curriculum. The Progressive 5S module can be purchased individually or as part of a comprehensive 12-module learning program.

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ith so much emphasis these days on becoming “lean” in the workplace, it is hard to believe that most people still refer to 5S as simply housekeeping. More properly defined, 5S is a process for creating and maintaining a safe, organized, clean, high-performance workplace. Promoting 5S doesn’t mean just picking up the trash, though that’s certainly a part of it. The emphasis is on being organized, designating a place for necessary items, and on being disciplined, ensuring that all items and equipment are always returned to their proper place.

In many organizations, 5S is implemented as an afterthought—another continuous improvement element on the “lean transformation checklist.” However, 5S must be viewed as a key prerequisite in preparing the culture for the necessary repeatability of standard work. But the simple truth is that if an organization is unable to manage 5S— and that includes maintaining it—then it’s unlikely they’ll be able to manage the rest of a lean journey as well.

Productivity and 5S Toyota didn’t rise to the top just by chance. Toyota is engaged in a never ending pursuit of waste elimination. Toyota understands that the largest, single contribution to increased productivity is eliminating n o n value-added time. A clean, well-organized workplace and the discipline to keep it that way solidifies the foundation upon which all other lean activities and productivity achievements are based. Implementing 5S has multiple benefits in that it: • creates the proper environment for standard work.

• is a prerequisite to perfect quality.

• encourages visual control.

• helps identify waste.

• places a high value on safety.

• promotes employee satisfaction.

Historically, 5S, was derived from the Japanese words that describe the five steps to creating an organized workplace. This “traditional” approach to 5S can be difficult to implement, audit, and sustain. When an organization takes the traditional approach to 5S, it tends to “mix and match” all five levels at once, which often leads to confusion and incomplete implementation of the program. Even if an organization can be reasonably successful with such an approach, the subjectivity of audits still presents a significant roadblock. For example, if an evaluator audits an area and records a 5S score of 2.5, what exactly does that mean? How does it compare to another auditor’s score of 2.5 for a different area?

Auditing progress and sustainment under a traditional 5S system often results in a wide range of scores that places both the program and its success in questionable standing.

Progressive 5S The essence of Progressive 5S is the ability to pair each step of the process with a specific task or activity along with a key discipline or behavior that would need to be performed for that step. By focusing in on one level at a time, it becomes significantly easier to both implement and monitor results. In short, we could not only reduce the amount of time to progress up the ladder to full compliance, but also be able to quantify results for performance tracking and to aid in ensuring sustainment. (See graph below.)

This simplified approach relating observable activities and behaviors offers one big advantage: it allows practitioners to concentrate on their 5S implementation one level at a time until the step is fully implemented and sustained. This allows the whole process to be viewed as more acceptable from the perspective of the workforce as well as more manageable from a plantwide perspective. If

Step

Activity

Behavior

Sort

Red tag

Remove unnecessary items

Set

Assign & label

Designate a “home” for every item in the work area

Sustain

Return

Put it back where it belongs after use

Simplify

Productivity

Eliminate nonvalue-added effort

Standardize

Plantwide

Expand ownership to everyone to leverage the gains

people understand the required behaviors needed to perform at a particular level, it’s much easier for them to incorporate those behaviors as a regular part of their routines.

The underlying logic to progressive 5S is that successes and opportunities can be quantified at each step thus providing a clear roadmap to progressing up to the next level.

Step 1: Sort So how does one move or “progressively improve” from one level to another? One key advantage of progressive 5S is the simplicity of scoring at the various levels.

With Level 1, as with all of the 5S steps, ten categories are defined, along with examples that detail what items in an audited area are considered necessary to its operation. Each of the ten categories can be tailored to any given area be it on the production floor or in an office. Of course, a clear definition of necessary and unnecessary items must be discussed and agreed upon. For example, one category in the list of 10 might apply to furniture and equipment, another might refer to personal safety equipment and a third might audit documentation and instructional guides, and so on. If only the items that are supposed to be in that category are there, then the area gets a score of 0.1 for that category. However, if an item that shouldn’t be there appears in the area, then the score for the category will be a 0, and the auditor will list those “extraneous” items so it is clear as to what needs to be removed and for what reason. No category can receive a score of 0.1 if any violations are observed in that category.

By using the defined ten categories and a simple scoring system of 0.1 for categories that meet the criteria and 0 for areas that do not, it’s easy to keep track of where an area stands with respect to the initial first step of 5S, or “Sort.” When an area has achieved a score of 1.0 (that is, a score of 0.1 in each of the 10 categories), then it has mastered that level and is ready to progress to the next step. Each level’s score is added to the those of previously achieved levels, continuing all the way up to 5.0 for all five levels; however each step must be mastered before moving on to the next higher level.

Step 2: Set Everyone in an area agrees where each item in that area will “live.” This is especially crucial for areas that have multiple users—placement of tools and equipment should make sense for their intended use, with frequency of use and ergonomics being given main consideration. Once a location has been determined, the location should be clearly labeled. It’s helpful to identify and label fire containers, equipment, and furniture; desktop and flat-surface items; aisles; storage containers; and tools, jigs, and fixtures.

Step 3: Sustain When an area is scored for compliance at the second level of 5S, it’s possible to get a total score of 2.0, that is, all unnecessary items have been removed and all items have a designated “home,” yet this score does not indicate or ensure that employees will actually place the items in the areas that are so designated. This behavior is evaluated in third step of Progressive 5S. At level 3, “Sustain,” the scoring categories highlight those items that are actually located where they are supposed to be when not in use. In this step, the importance of creating and sustaining operational steps or standard work becomes critical to the consistency and sustainment of planned operations.

Step 4: Simplify Level 4 addresses eliminating nonvalueadded effort. Originally, when we launched the Nissan facility in Smyrna, Tennessee, we were allotted a ten minute clean-up period at the end of each shift. But at level 4, we were challenged with the question, “What is it that requires ten minutes of clean up every day?” If workers have the discipline to keep their work area organized throughout a shift, then how much time would really be required to clean up at the end of a shift? By taking this view at Nissan, we were able to add nine minutes back to each shift, and those minutes contributed to increased productivity.

To implement level 4, the root cause(s) of “nonvalue-added time” issues must be discovered and then effective countermeasures must be implemented to eliminate

recurrence. Of course, eliminating the nonvalue-added activity is only a prerequisite to the most important step of substituting a value-added activity in order to realize true productivity improvement.

Step 5: Standardize Level 5 expands the view from a particular area to the entire organization. This includes evaluating the spaces between work areas, both on the shop floor and in office areas as well as the surrounding plant property, including the parking lot, the loading dock, and other “neutral” areas. If people in specific areas begin to take on these “outside areas,” or the spaces where their areas actually interface, then the entire site takes on a greater responsibility and ownership of promoting a philosophy of organization and discipline. Further, this emphasis on plantwide 5S creates a significant impact on site visitors (i.e., clients and potential customers) whose first impression is often the most lasting memory of the e n t i re visit.

At level 5, the entire organization, including the status of companywide communication, training, auditing, and a d h e rence to standard work, is under scrutiny.

A “House” in Order Inconsistent audits, sluggish progress, and inflated scores are likely under the traditional 5S system, which tends to suffer from lack of sustainment and subjectivity.

These shortcomings often mask opportunities, diffuse program effectiveness, and erode management’s credibility. If you want to establish an effective and lasting 5S program, one that will enable your entire organization to move forward with great strides on your lean journey, consider implementing Progressive 5S. Progressive 5S is a logical, step-by-step approach to organizing a high performance workplace. Progress is completely quantifiable, which makes it easy for everyone to understand and accept. With such a logical approach to building a foundation for high performance, who wouldn’t want to put their house in order as they pre p a re to entertain the global marketplace?

Managing Times | Q2.08 www.tbmcg.com/news/newsletter.php

13

THINKSYNC

Leveraging Lean to Eliminate Seasonal Inventory Surges Demand Analysis and Inventory Reduction Free Up More Than $1 million in Working Ca p i t a l Ken Koenemann, Managing Director, Lean Value Chain Practice, TBM Consulting Group, Inc.

L

“What should you do after you’ve established a clear material flow, dramatically reduced setup times, and squeezed every ounce of waste out of the production process?

It’s time to take a look at the broader value chain.”

ike every successful corporation, this $3-billion manufacturer and marketer of consumer household and personal care products has ambitious growth targets. After reviewing a detailed analysis of the market opportunity for each product family, company executives set a long-term goal to triple sales in the lighting segment. To do that with their current fulfillment processes would require an additional $30 to $100 million dollars in finished goods inventory, and another million square feet in warehousing space. That was unacceptable.

Shedding New Light on an Old Problem One of the company’s best-selling products in this segment is a light for boating and emergency situations. Marketed for hurricane preparation in the spring and summer, demand followed a somewhat seasonal pattern. In the factory where they make the light bodies and assemble them into the finished product, plant managers had established a clear material flow with tight tolerances and very little wasted movement from the injection molding machines through to assembly. But despite having an efficient production process, they were achieving only three inventory turns per year.

The problem was in the distribution network. The company stored several months of inventory in four regional distribution centers, plus two additional hurricane warehouse locations. One of its largest retail customers, which accounted for

more than 50 percent of the sales volume for the product, also had warehouses all over the country, as well as its own dedicated facilities for hurricane-related items. It was also carrying 13 weeks of inventory. The company needed to pull together a cross-department team to take a closer look at customer demand and come up with a better inventory management strategy.

Making the Value Chain Transparent One of the big “Aha!” moments for the team came when they overlaid four data elements: (1) point-of-sale data from their largest customer, (2) historical inventory levels, (3) shipment records, and (4) production volumes. The point-of-sale data went back to 2004, when four hurricanes hit Florida (Charley, Frances, Ivan, and Jeanne), three of them with sustained winds of more than 115 mph. A graph of this data clearly shows how customer demand at the retail level spiked with the preparation and cleanup activity around these storms. A no-sales-tax incentive program by the State of Florida that encourages residents to stock up on storm supplies triggered another sales spike.

Even in the worst hurricane season, when the company sold 189,000 lights during a peak six-week timeframe, inventory levels never fell below 500,000 units. To maintain pre-set inventory levels, as the data clearly showed, production responded to the sharp sales increases by cranking up output, only to shut down the assembly lines in

High Variability SKUs

Out of Sync • As illustrated by this month-to-month overlay, orders and shipments for this highly promoted product fail to align with the sales forecast, which is completely out of sync with production. Low production rates in January ramp up rapidly in February and March. The line is shut down completely in April and May when orders fail to materialize.

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subsequent months when sales returned to normal levels. It became very clear to the improvement team that their inventory management policies were responsible for creating the spikes in production and shipments. Yes, they did need to build ahead to get ready for the no-tax events and the storm season, but actual customer demand at the retail level over the course of the year was fairly stable. They also realized that they didn’t need to hold anywhere near the amount of inventory that they had been targeting.

To determine more appropriate inventory levels the team developed a complex simulation tool that allowed managers to test different inventory levels with each SKU. The simulation allowed them to become more comfortable with what would happen to their customers if they had less product sitting in warehouses. Using actual shipment and point-of-sale data, they set new min/max levels and looked at the impact in the distribution centers and on production if they manufactured product closer to customer demand. They paid close attention to whether or not they would ever run out of product and thereby lose potential sales, and calculated the number of inventory turns they could expect to achieve.

Using the simulation the team found that they could reduce total inventory for this particular product from $1.8 million to $500,000, increasing turnover to almost 11 turns per year, and still achieve the current 99.3 percent fill rate. Based on the

recommendation to pursue that target in phases, they developed an initial plan to reduce inventory to $800,000, which would double turnover from three to six turns per year. The week after completing the analysis, the client went from two shifts down to one on this product line, and then shut down production entirely for five weeks to work down the excess inventory.

To ensure that product would still be available during peak demand periods, they also established a weekly meeting during the hurricane season. Pulling together managers from sales, marketing, and operations, they discussed whether they needed to increase or decrease production. If they needed to boost output, operations established a process for bringing in and training temporary labor so that they could gradually ramp up production by 10,000 units per day.

Trust the Numbers As part of this sales and operations planning (S&OP) process, managers had to learn to trust the statistically-based forecasts that were being calculated by their advanced planning and scheduling solution.

Previously, the software would tell them what they needed to make, and then managers would manually adjust the numbers in order to hit the inventory numbers that they thought were really needed.

When they looked at the fulfillment process, the improvement team also found that order policies were driving variation and volatility in demand. Their minimum order quantity

Low Variability SKUs

“The team found that they could reduce inventory from $1.8 million to $500,000, tripling turnover to almost 11 turns per year, and still achieve the current 99.3 percent fill rate.” for the product was a 65-unit package that shipped out on a quarter pallet, which retailers could move directly to the sales floor. With average store sales of 10.6 units per week, the quarter pallet represented a month and a half of inventory.

Working with their largest customer, company managers determined that a unit pack of 13 (aligned with the weekly sales average) would save floor space and dramatically smooth out the replenishment process. Not only that, the redesigned packaging was cheaper than the current packaging, and it would fit into their existing merchandizing fixtures.

This consumer goods company has begun its journey toward a lean value chain by focusing on demand management. It’s now using point-of-sale data to set appropriate inventory levels. Regular S&OP meetings are speeding communication and aligning market intelligence with production. Packaging configurations are being reviewed with customers to determine what’s best for both the retail shelf and the overall value chain.

Developing a lean value chain means addressing four key links: demand management, order fulfillment, business planning and scheduling, and supply management.

Managers now understand the benefits of having inventory levels tied to customer demand, and they know how to manage the risks. The company will achieve further inventory reductions, and the ability to support future sales growth, as it rolls out these practices to other business units and product lines.

Bumpy Ride • Even for this low variability product, the alignment of orders and shipments could be improved further by smoothing the large swings in the JanuaryFebruary and September-December timeframes.

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15

FIELDNOTES Making Point Kaizens Effective for Sustaining MDI Usually after we train a company’s leadership team in managing for daily improvement (MDI), we recommend using point kaizens as a means of helping to sustain results. Often the results are mixed because point kaizens were not given priority in the leaders’ daily or weekly activities. It became clear to me that standard work for choosing point kaizens was needed, as well as some sort of extra incentive to ensure that point kaizens were used successfully for sustaining MDI initiatives. It seemed that point kaizens were akin to exercise—everyone recognizes their value, but without incentive to actually do either one, both tend to be allowed to fall by the wayside.

First, we established standard work for developing point kaizens: • Record end of the line abnormalities and list them as point kaizen topics.

• Divide the point kaizen topics into “ABC” groups. An “A” point kaizen may take up to a full day to work on. A “B” would be about a half a day in length, and a “C” would require two or fewer hours.

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• These point kaizen topics can be assigned to or volunteered for by the team leaders in order to provide focus on necessary topics that will provide immediate impact by removing an abnormality.

• Post the “ABC” list at the line near the SQCD board. If operators become available, instead of looking for work for them to do, the team lead or supervisor will have a handy list of topics for the person(s) to work on.

This is a type of “set up reduction” for project selection by having them readily available.

Once we had standard work in place for choosing point kaizens, I began to work on the incentive issue. At Milbank we established a process where once a week the supervisors and team leaders make presentations to the leadership on the point kaizens they performed that week. The presentations are kept short and simple: one to 10 PowerPoint slides requiring three to 10 minutes of explanation and are e-mailed to the kaizen promotion officer in advance.

The entire group can then vote on which person they thought obtained the best results for that week’s point kaizen.

Choosing the best point kaizen adds a reward factor to the process, which when coupled with the accountability/peer pressure factor of having to present results weekly, greatly enhances the probability of successful sustainment.

Another company that has instituted this process is Gopher Engines. For the reward part of the program, Gopher buys various gift cards that are placed in a hat and the person whose kaizen is voted the best that week gets to choose a card from the hat.

A positive outcome of this process is that it helps to drive culture change through continuous improvement by formalizing the point kaizen as part of the standard work for anyone in a leadership position. Instead of just telling people they should be managing for daily improvement, this gives them an effective way to codify doing it.

— Gary Rascoe, Senior Management Consultant and Trainer, TBM LeanSigma® Institute

Fosfertil and LeanSigma®: Dramatic Changes in a Few Short Weeks The company implemented a solution developed by TBM Consulting, also reducing water consumption using LeanSigma technology. __________________________________ Fosfertil, Brazil’s largest supplier of raw material for fertilizers, implemented LeanSigma over 12 weeks at its seven manufacturing units in Araucária (PR), Catalão (GO), Cubatão (SP), Piaçanguera (SP), Tapira (MG), Uberaba (MG), and the Sea Terminal (SP). Fosfertil’s goal was to optimize all of the organization’s processes through lean. Among the results acheived were productivity improvement of 50 percent for the industrial areas and a dramatic reduction of water and steam

CONSIDER THIS! consumption at some production units. One of the projects, dubbed “Hunters of Lost Water,” implemented by a team at the Araucária unit, attempted to reduce water consumption by 2 percent. The team was able to greatly exceed that goal by implementing changes to the existing processes to produce some chemical combinations that allowed water to be re-used for some processes, thereby reducing the use of drinkable water. In order to fight all waste at the plant, repairs were also conducted on faucets and automatic flushes. At the Cubatão unit, the team was able to reduce steam consumption for the production of ammonium nittrate by 50 percent. At the Sea Terminal, the defined goal was to improve the capacity to transport fertilizers by 15 percent, and the team achieved an improvement of 27 percent. “Thanks to the LeanSigma process, we could understand how it is possible to perform big changes in a short time and with a small investment,” noted Roberto Busato, Fosfertil industrial director. He also pointed out that results and solutions were feasible thanks to the creativity of those professionals involved in doing the job. After implementing lean at the industrial plants, the work was also expanded into the administrative areas.

— adapted from Alimento Seguro (Safe Food) magazine, September 12, 2007

The Lean Excellence Conference Networking, Benchmarking, and Strategies for the Continuous Improvement Office September 23–25, 2008 Des Moines, IA For more information: 800-438-5535 The Lean Excellence Conference will replace the traditional LeanSigma®/Kaizen Promotion Office Exchange we have hosted in the past. The conference is perfect for mid-level managers and leaders managing the daily implementation of lean inside their organizations.

At the Lean Excellence Conference you’ll have the opportunity to benchmark best-in-class lean practices and participate in case studies and breakout sessions on today’s highest priority lean topics. There will be an expanded agenda with unique discussion tracks for traditional manufacturing and continuous process manufacturers. Our preliminary list of topics includes: • Building an effective continuous improvement office • Identifying and tracking lean performance measurements • Lean supplier management • Aligning lean results with financial reporting • Sustaining the gains made from lean improvement • Developing standard work for leaders • New plant planning and layout—how to reduce significant capital spending by being more focused and more effective • Leveraging lean to improve energy consumption and savings

The conference kicks off with a plant tour of Vermeer Manufacturing Company— an accomplished lean organization with more than 10 years of lean experience and a well-established lean culture. Observe lean tools in use and understand their role in supporting the Vermeer culture of continuous improvement.

Keynote speaker Bodine Balasco will discuss the demands of today’s marketplace and how they require us to learn new techniques and new skills to help us turn our goals and our vision into reality. Bodine Balasco was voted on of the top 21 speakers for the 21st Century by Successful Meetings Magazine.

Don’t miss this opportunity to hear from this engaging, informative speaker and learn techniques to help you boost your natural creative capacity and generate the results you want.

Managing Times | Q2.08 www.tbmcg.com/news/newsletter.php

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Q2.08

MANAGING TIMES TBM LeanSigma® Institute 2008 Event and Workshop Schedule Corporate Headquarters 4400 Ben Franklin Boulevard Durham, North Carolina 27704 USA 1.800.438.5535 Australia 403A 86 Bay Street Port Melbourne, Victoria 3207 Australia 03.9681.7385

Business Process Kaizen Instructor Training Aug 26-29

Durham, NC

CEO Boot Camp Jul 28-30

TBD

Dec 10-12

TBD

Design for LeanSigma New Products and Processes ®

Jul 7-11

Durham, NC

Dec 8-12

Durham, NC

Kaizen Breakthrough Experience Sep 8-12 Nov 3-7 Nov 24-28

Gai-Tronics Limited - Staffordshire, UK ConMed - Utica, NY WIKA - Klingenberg, Germany

Kaizen Promotion Office Workshop

Brazil Avenida Moema 170, cj 45 Sao Paulo -- SP Brasil 04077-020 55.11.5051.7490 China Room 3, 3/F, POS PLAZA 1600 Century Avenue Pudong Shanghai, 200122 P.R. China 86.21.6888.6671 India “Technopolis” Sector-54 DLF Golf Course Road Gurgaon, India 122 002 91.124.437.5995 Mexico Calzada San Pedro #250 Nte. Edificio HQ Col. Miravalle CP 64660 Monterrey, NL 52.81.50.00.91.36 Switzerland 29, route de Pré-Bois 1215 Geneva 15 Switzerland 41.22.710.77.70 United Kingdom 3 Gleneagles House Vernon Gate DERBY DE1 1UP United Kingdom 44.1332.367378

May 13-16 Jul 21-25 Aug 25-29 Oct 13-17

Monterrey, Mexico Durham, NC Gurgaon, India Durham, NC

Oct 14-17 Oct 14-17 Nov 18-21

Monterrey, Mexico São Paulo, Brazil Shanghai, China

Oct 21-22 Dec 2-3

Monterrey, MX Durham, NC

TBM Lean Certification US Track 4 begins Jul 15 US Track 5 begins Sep 9 China Track 1 begins Aug 25

Lean Management Accounting May 19-20 Jun 17-18 Sep 9-10

Monterrey, MX Durham, NC Durham, NC

LeanSigma for the Extended Enterprise (New Lean Value Chain Awareness Workshop) Jun 25-26

Huntingdon, United Kingdom

LeanSigma ® for Process Industries Jun 10-11

São Paulo, Brazil

Sep 17-18

Gurgaon, India

LeanSigma Vision Tour May 20 Aug 28 Oct 28-30

LaFonte, Brazil TBD, Sao Paulo, Brazil Hayward, Sealy, Hubbell, WIKA, Atlanta, GA / Aiken, SC

LeanSigma ®/Kaizen Promotion Office Exchange Sep 23-25

Vermeer Manufacturing - Des Moines, IA

Managing for Daily Improvement Jun 2-6 Jun 11-13

Kenyon, MN Monterrey, Mexico

Aug 4-8 Sep 15-19

Shanghai, China Utica, NY

Sep 30-Oct 1 Oct 30-31 Nov 5-6 Nov 5-6 Nov 10-11 Nov 11-12

Paris, France Frankfurt, Germany Buenos Aires, Argentina New Delhi Beijing, China Monterrey, Mexico

Quest for The Perfect Engine™ Jun 11-12 Jun 17-18 Jul 9-10 Aug 13-14 Aug 20-21 Sep 3-4 Sep 30-Oct 1

Barcelona, Spain Boston, MA Monterrey, Mexico Hong Kong, China Bangalore, India São Paulo, Brazil Nashville, TN

Quest for the Perfect Engine ™: With Plant Tour Aug 5-7

Salt Lake City, UT (Autoliv)

Quest for the Perfect Engine for the Garment Industry May 21-22 July 29-30

San Pedro Sula, Honduras Oct 21-22 Shanghai, China

Kuala Lumpur, Malaysia

Shop Floor Kaizen Breakthrough Instructor Training Aug 12-15 Sep 9-12 Oct 7-10

Durham, NC Monterrey, Mexico Derby, UK

Oct 14-17 Oct 27-31 Nov 11-14

Sigma Kaizen Black Belt Week 5: Jun 16-20 Week 1: Aug

Northlake, IL TBD

Sigma Kaizen Green Belt Week 1: Aug

TBD

Shenzhen, China Gurgaon, India Durham, NC