SEMCO Managing Times Q1 2011

MANAGING TIMES

Q1.11

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

Sigma Electric Beats Low-Cost Competitors with Focus on Service

2 It Takes a Village to Catch the Rain

5 Vermeer’s Lean Process Methods Support Green Movement

8 Leader at Armstrong World Industries Prepares for Market Rebound

PUBLISHER’SNOTE

You Are the Quarterback. Lean is the Game Plan.

T

he most important and recognizable player in American football is the quarterback. The offense must execute the coach’s play calls, yet the quarterback must be able to improvise based upon the defensive strengths and weaknesses to move the ball down the field.

Like any leader, innate talent, training, and experience contribute to a quarterback’s success. But he wouldn’t be able to do anything without the rest of the team’s adherence to discipline and process excellence.

Such attributes enable the best teams to execute with consistency, to be responsive, and win championships.

In this issue of Managing Times, I noticed a similar theme among our feature stories: Lean is playing a pivotal role by providing a platform for improvement, achievement and sustainability that support the vision and passion of talented leaders that we’re proud to work with.

The Watershed Organisation Trust (WOTR) in India is using lean to introduce productivity-enhancing and waste-reducing processes that increase water levels, improve crop yields, extend the availability of drinking water, and convert wasteland to viable farmland.

Vermeer Corporation, a long time lean champion, is using lean process improvement methods to reduce landfill waste and encourage recycling. The company has leveraged lean to embrace environmental stewardship.

Read the article to learn about the seven green wastes.

In Leadership Insights, Don Maier, Senior Vice President of Global Operations and Supply Chain at Armstrong World Industries talks about their lean transformation and preparation for a housing market rebound.

Sigma Electric has leveraged lean to transform itself into a highly competitive organization. They operate in a low-cost, highly commoditized market and now compete with a differentiated model that offers high quality, flexibility and responsiveness.

As a result, the company is growing at a 20 percent compound annual rate. They have remained price competitive by containing costs and keeping high-value knowledge and production assets in India. They’ve become a problem solver for customers while maintaining a low-cost structure.

Be sure to congratulate the team at Milbank Corporation in Kansas City. The electrical meter socket manufacturer was recently awarded the TBM Perfect Engine Site Award for its commitment to lean excellence in manufacturing. Since 2007, Milbank has liberated cash and space allowing it to invest in a new alternative energy solutions business that will ensure growth and differentiation well into the future.

Operational excellence plays a pivotal role in helping each of these organizations to differentiate, grow and serve their customers and constituencies. I was certainly inspired. Ready. Set. Hike! Let’s make 2011 a winning year.

Anand Sharma Co-founder & CEO TBM Consulting Group, Inc. asharma@tbmcg.com

Q1 .11

MANAGING TIMES

Publisher Anand Sharma: asharma@tbmcg.com Executive Editor William A. Schwartz: bschwartz@tbmcg.com Managing Editor Angela Scenna: ascenna@tbmcg.com Featured Columnists Carl Deeley David Drickhamer Joe Panebianco

Gary Rascoe Anand Sharma Tonya Vinas

Contributors Terry Butler Fred Earley Paul Hirt

Don Maier Melissa Slater David Drickhamer

Art Direction and Design IONA design www.ionainteractive.com Printing Carter Printing & Graphics, Inc. www.carterprintingnc.com Published 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: Precision casting and finishing is a core capability for Sigma Electric Manufacturing Corporation.

M

ary Andringa, President and CEO of Vermeer Corporation was inducted into the Iowa Business Hall of Fame at the Greater Des Moines Committee’s annual Black Tie dinner on December 9, 2010. Ms. Andringa was honored for outstanding leadership and contributions to business and community development in Iowa…Dave Johnson, formerly of ConMed Corporation, is now the VP of Global Operations and Continuous Improvement at Steris Manufacturing…Also at Steris, Rob Ledbetter has been named the Director of Lean Manufacturing Operations…Joe Gausditis, Site Engineering Manager, will assume all responsibilities for the development and rollout of all continuous improvement activities at Zimmer in Parsippany, NJ…Travis Jansen is now the Lean Champion at Armstrong Industries in Thompsontown, PA…Doug Shuff was recently promoted to Vice President Business Transformation at Harsco Minerals. Doug also co-presented a webinar with TBM Consultant Gary Rascoe in August 19, 2010. The webinar title is “Effective Execution of a Business Process Kaizen” and can be found as an archived event on the TBM web site in the “webinars” section…

Carlisle Corporation recognizes the following new Carlisle Operating System (COS) associates: David Nieto, Carlisle Food Services, COS Site Manager in Chihuahua, Mexico…Eric Hines, Carlisle Power Transmission, COS Site Manager in Springfiled, MO…Deb Walock, Carlisle Industrial Brake & Friction, Global COS Director…

Congratulations to the following Lean Certification Graduates from GEX in India: Bhavya Subbarkrishan, Sanjay Ramachandra, Ganesh Rao.M, Vineet Jain, Mallikarjun Vasanad, Kartick Chanden, Bibhuti Bhusan Pradan, Mani Sudhakaran, Ramachandran Gopal, Kanchana, Kokesh Kumar, Karunanithi, Nipun, Srivathsa, Karumbaiah…

Congratulations to the following graduates of the TBM Lean Certification Program

Leader course in the US: Mike Lyall, Scott Williamson, Joe Cece, Tim Schmidt, and Don Croteau of Accellent…Robert Carmack and Mike Parkes from Owens Corning…

Congratulations to the following graduates of the TBM Lean Certification Kaizen Facilitator course in the US: Nathalie Rajway-Tukwila, WA, Ryan Boyce-Tukwila, WA, and Shawn Jutte-St. Augustine, FL from Carlisle Interconnect Technologies…

Kenneth Carmeron-Fort Scott, KS from Carlisle Power Transmission Products…

Robert Dodson-McDonough, GA from Carlisle Tire and Wheel…Alan PennellsPontypol, Wales and Tom Hall-Bloomington, IN from Carlisle Industrial Brake & Friction…Melinda Barbour and Ian Eckman from Carlisle Construction Materials in Carlisle, PA… Congratulations to the following TBM Lean Sigma® Green Belt Graduates: Nicholas McCoy and Ray White from Owens Corning…Scott Lancaster and Todd Bullington from Hayward Pool Products… and Renee Smith from Sealy, Inc. Congratulations to Albert Schott from WIKA Germany for earning his LeanSigma Black Belt Certification from TBM… TBM consultants Doug Bonner, Herb Brown, Mike Serena, Nero Haralalka, and Jonathan Wheatley have earned an AAMI Certification in the FDA’s Quality System Requirements and Industry Practice…TBM added two new members to its Board of Directors: Ron Wince, President and CEO of Guidon Performance Solutions and Mark Gottfredson, senior partner and board member of Bain & Company…Nicky Fletcher recently joined TBM as Marketing and Business Development Manager for the United Kingdom. Suman Jasrai recently joined TBM as Marketing and Business Development Manager for India.

PUBLISHER’S NOTE. LEAN COMMUNITY NEWS

A publication of TBM Consulting Group 4400 Ben Franklin Boulevard Durham, North Carolina 27704 800.438.5535 www.tbmcg.com

LEANCOMMUNITYNEWS

Managing Times | Q1.11 www.managingtimes.com

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GIVINGBACK

It Takes a Village to Catch the Rain

By Gary Rascoe, Senior Management Consultant and Trainer, TBM

By Gary Rascoe Senior Management Consultant and Trainer, TBM

You think you have trouble getting some people in your organization to get on board with your change initiatives. What if you had to convince a whole village?

T

GIVING BACK

he Watershed Organisation Trust (WOTR, www.wotr.org) works with villages in drought-prone regions of India to restore the water supply and reduce the need for people to migrate to the cities during the dry season. The non-profit organization provides technical guidance and some funding. The villagers provide the collective will and labor to terrace and trench the land to catch the rain when it falls during the monsoon.

The idea is simple: Increasing plant cover, cutting fewer trees, diverting runoff and slowing the flow of rainwater, allows the soil to absorb more moisture. As a result erosion is reduced, soil nutrients are retained, the water table rises, and wells are less likely to run dry. The benefits flow down from there.

“The first thing people do when their watershed regenerates and their income goes up is to take their kids out of the fields and put them in school,” one of WOTR’s

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founders reported in a November 2009 National Geographic magazine article.

Through 2009 WOTR had implemented over 200 watershed projects in the states of Maharashtra, Andhra Pradesh, Madhya Pradesh and Rajasthan, covering an area of more than 350,000 acres. In comparison to other non-profits WOTR has always been very efficient in terms of how much of the funding it raises goes directly to support village projects.

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Last year TBM Consulting Group provided LeanSigma certification training to some of the organization’s managers so they could make it even more efficient.

Their objective was to increase the assistance that they can provide to villages without incurring any additional expenses.

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Among other tools we taught them how to create value chain maps and business process flow maps for administrative processes in order to identify wasteful steps and processes that could be eliminated.

Over the years WOTR has learned that the technical knowledge required to reshape the land and improve the watershed is only the beginning. For any changes to remain in place from season to season requires cooperation and careful attention to the social dynamics of the farming villages. This is where lean program managers and kaizen promotion officers might learn a lesson or two about building consensus to drive sustainable change.

In this region of India water is usually in very short supply during the months before the monsoon arrives in June, which causes families to migrate or to wait for the government to send in tanker trucks of drinking water. Besides the obvious impact on family cohesion, the forced migration has a negative impact on access to healthcare and childhood education. WOTR helps solve this problem at the beginning of a project by paying villagers a modest wage to stay home and move dirt around for three to five years. As attractive as such an offer might be, it comes with a number of conditions.

First, WOTR will not begin a project without the agreement of everyone in the village, including women and members of lower castes who are ordinarily excluded from such decisions. Another requirement is that villagers must have a personal stake in the success of the project in the form of sweat equity. WOTR pays people for 80 percent of their hours worked and every family is required to contribute free labor to the project. In addition, to give plants the opportunity to recover and grow, the villagers

must agree to stop free-grazing cattle and not cut down any trees.

In addition to the farming benefits, WOTR simultaneously works to improve the cleanliness of the drinking water, which can dramatically reduce childhood mortality in villages where many children die from illnesses caused by waterborne pathogens. In addition to a year-long supply of safe drinking water, other improvements include increased milk production and higher income levels from growing cash crops. Despite such harsh realities and obvious benefits, the social realignment and other conditions can be very difficult for some people to accept.

In the beginning of a project WOTR representatives will explain the requirements for collective participation and labor in a series of communication meetings. Many of

these representatives speak from personal experience having once lived in other villages that have been transformed by the rain harvesting practices. But just as many manufacturing executives don’t understand what lean is about until they visit a factory that is doing it, the real buy-in comes when villagers visit other successful projects and see the results of the work for themselves.

After everyone agrees to move forward, WOTR teaches villagers how to plan and track their work, including a large scoreboard similar to an hour-by-hour chart that displays overall progress. All of the work is performed by the villagers without the help of any outside contractors. Tracking and calculating how much each person earns is controlled by the villagers as well. As a project nears conclusion, while some are always reluctant

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GIVINGBACK (continued)

to finish up and give up the steady source of income, people typically move on to highervalue work such as crop production that offers higher income levels.

WOTR’s holistic approach yields holistic results: • Ground water levels typically increase 25 to 60% • Cultivated areas increase by at least 80%, and irrigated agriculture areas increase five- to ten-fold.

• Crop production climbs 90% to 145 % • Village school enrolment increases by 25% to 40% (to between 75-100% of all children).

• Clean drinking water becomes available year round or for a greater part of the year • Milk production increases by at least 200% • Former wastelands are replaced by tree and grass cover that’s plainly visible in overhead before and after photographs.

• And finally, social harmony improves as women and the downtrodden gain a meaningful voice in local decision-making processes.

GIVING BACK

At TBM we are proud to contribute to the future success of an organization that has already made such an impact on people’s lives. During our visits the villagers have always been open, friendly and immensely appreciative of the guidance and support that WOTR has provided. In its most recent annual report, WOTR states that the Lean Sigma trainers taught and certified by TBM are introducing the productivity-enhancing and waste-reduction processes across the WOTR group and its projects.

“The benefits have been observed in that the various wastes have been identified and are in the process of being reduced,

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without reducing the quality of social mobilization. The projects can now be completed in a much shorter period than before,” the report states.

Many watershed development projects in drought-stricken areas around the world have failed not because of a lack of funding or technical expertise. They have failed because organizers failed to manage the social aspects of such initiatives. The same could be said for the lean initiatives at many companies. By communicating the potential benefits and getting everyone on board by showing examples of the future potential, lean program leaders and kaizen organizations can avoid future hiccups that might delay or otherwise derail progress.

TBM commends the staff of WOTR for the work they have done, for the sustained impact of their programs, for the recognition that they have received, and also for their spirit of continuous improvement.

Beyond watershed and land improvements, WOTR works with the villagers to think about a future that includes better healthcare, new schools, more efficient farming practices, replacing kerosene with pelletburning stoves, and solar lighting. As they’ve learned, with collective participation and hard work, anything is possible.

-----------------------------------------------------Special Note: TBM Consulting Group CoFounder, President and CEO Anand Sharma serves on the WOTR board of directors.

TECHTALK

Saving Green At Vermeer lean process improvement methods naturally support green objectives while simultaneously lowering operating costs.

By David Drickhamer, independent business journalist and former editor of Industry Week magazine

By combining its operational excel-

TECH TALK

lence initiatives with a proactive environmental program, Vermeer Corporation has made dramatic waste and operating cost reductions. Headquartered in Pella, Iowa, Vermeer manufactures heavy equipment serving agricultural, forest, environmental, underground and specialty excavation customers. Employees cut, bend, weld, clean and paint hundreds of tons of steel every year.

Vermeer conducted its first kaizen event in 1998 and hasn’t looked back. Over the intervening years it has leveraged lean manufacturing methods and Six Sigma tools to transform the company and dramatically improve production efficiency and quality, reduce lead times, improve safety, minimize inventory and boost profit margins. The company has found that efforts to eliminate wasted energy, water, trash and emissions are a natural addition to its continuous improvement processes and culture.

“If you’re going through a kaizen event and you’re thinking about eliminating waste, it doesn’t take any longer to think about eliminating green waste as well as processrelated waste,” reports Terry Butler, Vermeer Director of Environmental Health and Safety.

–––––––––––––––––––––––––––––––––– Like a lot of manufacturers, Vermeer placed recycling bins in production areas many years ago. But when Vermeer Environmental Engineering Manager Fred Earley and a “dumpster diving” kaizen team analyzed the program, they found that recycling procedures were not very clear, and that there were many more trash cans than recycling containers.

When the team sorted out one day’s trash on a tarp on the lawn, they found that 70% of what was then being sent to the landfill could in fact be recycled.

–––––––––––––––––––––––––––––––––– The kaizen team subsequently defined new recycling procedures and trained everyone on the site. They introduced segregated recycling bins on carts that operators must empty after every shift in a central collection area. And they reduced the number of trash cans to make it easy to recycle and less convenient to just throw stuff away. Supervisors have reinforced the recycling habit by making it a part of each work area’s weekly 5S audit.

“It’s been embraced very positively by our employees,” says Earley. “Who doesn’t want to create a better environment in which to live and work?”

A kaizen team at Vermeer pick through one-day's trash revealing that 70 percent could be recycled.

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TECHTALK (continued)

Reducing wastewater is another environmental priority at Vermeer. Just as they do when spotlighting non-value-added time in order-fulfillment processes, continuous improvement teams make the opportunities for environmental improvement more visible by mapping the amount of energy and water consumed, the amount of scrap generated, and how much pollution is emitted at each stage of a value stream.

Prominently placed recycle carts make it easy to recycle.

–––––––––––––––––––––––––––––––––– As a result of these renewed recycling efforts Vermeer has reduced off-site trash disposal by over 760 tons per year. By finding beneficial uses for materials that were once thrown away, the company’s landfill waste has fallen from more than 60% of total waste to less than 30%, and it’s still falling. The lean and green program has produced hard dollar savings of $230,000 per year in the form of disposal fee savings and recycling credits.

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A value stream map that accounts for forms of environmental waste.

TECH TALK

After applying such techniques to analyze a parts-washing line, a team rerouted overflow pipes, eliminated heated water, and converted paint-prep coating systems from a phosphate to a zirconium-based process. Changing the overflow configuration reduced the amount of water going to the Vermeer wastewater plant—where it’s treated before being released back to the city—and reduced water usage from 11 to 4 gallons per minute. Total reductions in water usage and emissions now save Vermeer $114,000 annually.

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––––––––––––––––––––––––––––––––––

“Over the years Vermeer has applied lean to all areas of our business,” notes Earley. “Using it to improve our environmental stewardship is a natural progression. The challenge is learning how to see green in everything you do and then applying lean principals to those opportunities.”

–––––––––––––––––––––––––––––––––– Wastewater reductions at Vermeer dramatically exceeded annual targets.

Other environmental initiatives have reduced particulate emissions by 62% from 6.2 tons to 3.6 tons per year through technology upgrades and the addition of new controls and collection equipment. Implementation of a laundering and reuse process for personal protective equipment has saved $43,400 per year in replacement and disposal costs.

Much of the environmental progress made by Vermeer can be attributed to changing how people think and making environmental waste more visible. In addition to the seven wastes familiar to anyone applying lean manufacturing principles, trainers now talk about applying the three Rs (reduce, reuse and recycle) to the seven green wastes.

Seven Lean Wastes

Seven Green Wastes

1.

2.

3.

4.

5.

6.

7.

1.

2.

3.

4.

5.

6.

7.

Overproduction Waiting Excess Inventory Defects Transport (Conveyance) Over Processing Excess Motion

Energy Water Materials Garbage Transportation Emissions Biodiversity

Source: Vermeer Corporation

Many manufacturers, motivated by both growing customer demands and a genuine concern for the condition of the world we inhabit, are making environmental stewardship a core part of their company values. Earth-friendly manufacturing starts where value is created: on the plant floor. As Vermeer has demonstrated, incorporating lean and green priorities into process improvement programs can translate those lofty values into quantifiable improvement to the environment, and your bottom line.

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“Waste is waste. Find it and eliminate it,” advises Earley.

“Applying lean principles is a real win-win and the results speak for themselves.”

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LEADERSHIPINSIGHTS

Loving the Lean Life

by Tonya Vinas, freelance business journalist and former editor of Industry Week magazine.

Don Maier, Senior Vice President of Global Operations and Supply Chain at Armstrong World Industries is leading a lean transformation at the global floor- and ceiling manufacturer as it prepares for a market rebound in the struggling building-products industry.

Q. You have been involved in lean since

LEADERSHIP INSIGHTS

the late 1980s, working at some of the first non-automotive companies to successfully build lean cultures (Batesville Casket Company, Hillenbrand Industries, and Hill-Rom Inc.). What’s different about being a lean leader today?

Fundamentally, the tools and philosophy are the same. It’s still about creating a culture focused on continuous improvement and getting up every day to improve safety, quality, cost and delivery. I do see two big differences in the business environment. First, we have significant down cycles across just about every business sector. A key piece of lean is freeing up and redeploying unidentified capacities. That’s really difficult to monetize if you’re in a down cycle like we’re in now because you don’t have the opportunity to grow at the rates you did 20 — or even four — years ago.

Secondly, business in general is moving at a much faster pace, and the transformations I’ve been involved with have been moving at an accelerated rate, creating change faster than we would have been able to manage 20

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years ago. The global success of lean philosophies has created an environment that is more open to change these days.

Q. Prior to joining Armstrong, you were with TPG Capital, a private-equity group.

In this role, you led the lean pilots and manufacturing due diligence at Armstrong. What is it like to be a lean champion in this arrangement?

The difference is not so much about private equity as it is about management alignment and speed of making decisions. Armstrong’s lean journey was sponsored and initiated directly by our board of directors. With that buy-in and support of the board of directors — matched up with management commitment — you can really implement radical change rather quickly.

Q. Sounds as if it makes your job a lot more fun. Does it?

Absolutely. I talk to so many people at the TBM conferences, and their biggest problems relate to how do you get the leadership buy-in and fortitude to let the lean transformation take place and not cut and run the first time you have a setback. It’s something that people really struggle with, and the pri-

vate equity environment gives you a great backdrop to get that done.

Q. Do you think that’s because the private-equity community has recognized lean as a powerful way to create value?

You bet. There are all kinds of deals that are done in the private-equity space. During the diligence process, significant opportunities in lean for both manufacturing and business processes are usually identified. In those, creation of a lean culture is built into the investment thesis, so you really have buy-in even before Day One of the transformation process.

Q. Your first task for TPG was creating

You as well get a sense for the talent of the team. What’s the morale of the workforce?

What’s their pace? What are they doing? Are there tow motors driving everywhere? Or are people working in a synchronous way?

A key thing I look at is lead time from the time raw materials hit the dock to when finished goods are going out the other end.

Generally, that gives you an idea of total lead time versus value-added processing time.

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an assessment model to evaluate improvement potential, and then use it to evaluate Armstrong. Where did you begin?

We spent quite a bit of time at Armstrong corporate headquarters getting metrics and data, both quantitative and qualitative. We then took that data and, as best we could, put that into our assessment model. We then conducted six physical site assessments. They were done on the gemba, walking the plant floors with the managers.

At Armstrong they had a strong

Q. What were you looking for that you

ty performance convinced me

didn’t get from the numbers?

With these gemba walks it is pretty easy for someone with a trained eye to start to see the signs of opportunity. Is there flow, or are there islands of batch? What’s the state of work-in-process? What’s the frequency of raw-materials replenishment? What’s the finished-goods inventory position? Are they building to a schedule or customer demand?

track record of year-over-year improvements. I was very impressed with the caliber of the manufacturing leadership and Armstrong’s world-class performance in safety. The discipline and behavioral change in culture needed to drive their global safethat they could embrace a lean transformation and accelerate their rates of improvement.

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LEADERSHIPINSIGHTS

(continued)

Q.

And then . . .

The assessment model has several sets of questions that take the subjective observations from the gemba walks and quantify them into specific scores. These scores are then extrapolated across the financial data that was entered to create pro-forma P&Ls, balance sheets, and capacity charts. While it is an assumption-based model, it has been proven to be fairly accurate. The two big metrics are gross productivity and workingcapital improvement.

Q. Does the model account for challenges outside of management’s control such as raw material prices or a shortage of skilled employees?

Yes. It also estimates the cost to drive the transformation and the degree of difficulty to implement — is it going to be tough drilling or easy drilling, and are there other initiatives that could accelerate or complicate the progress. That’s a part that a lot of people miss . . . how difficult is it going to be all things considered?

Q.

LEADERSHIP INSIGHTS

If the model shows a favorable investment opportunity, and TPG takes the next step — as it did for Armstrong — do you share the results with the management team?

Yes, and management is usually in complete denial and can’t believe there’s that kind of opportunity. Inevitably, that prompts us to ask, why don’t we pick a couple of sites, and we’ll go run a couple of week-long events, and see what we can find out? I call these the pilots. These pilots, often involving a number of Kaizen events, open up the door and always show the real potential. The next step is to do a robust value-stream model.

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Q.

I’m betting at this stage, you have curiosity from some managers and frontline employees, and doubts from others.

How do you take the next step to motivate people and get them on board?

The next 100 days are very important. I call it the proof-of-concept stage. You need to pick projects that will drive results that are visible, sustainable, and that will hit the P&L. Then you have economic evidence of what the lean transformation can deliver, and you begin to get buy-in. After that, you begin introducing lean at a couple of other sites. I call this the ripple effect. It’s kind of like the camel getting his nose under the tent. Once his nose is in the tent, it’s not long before the whole camel is in the tent.

Q.

In a multi-plant company such as Armstrong, how do you know where to begin?

You want to stack the deck in your favor, so I look for a couple of characteristics at each site: Is the management team open and capable? Will the proof-of-concept be indicative of what is possible at other sites? And is this a middle-of-the-pack site? You pick a middle-of-the-pack site because if you pick the worst site and show improvements, people will just discount it, and you won’t get any credit. Conversely, if you go to the best site, people will say it might work there, but we don’t have the skills or ability to get those types of improvement at the other sites.

At the end of the proof-of-concept, you want to have the management team saying this is valid, this really works, and we can make this work across the network of sites.

Q. It sounds easy when you describe it,

Q. Where were you that Friday?

but no lean transformation is easy. Tell me about a memorable challenge at Armstrong.

At our very first site, we had a bunch of managers in the room for our kick-off presentation. My second slide came up. The first part of it was the definition of lean, and the second part was the definition of kaizen.

One well-respected and very intelligent manager, “Bob,” raises his hand and says “Don, is this one of these meetings where we can only listen, or is this one of those meetings where we can ask questions?” So I told him we wanted dialogue, and to go ahead. He said “Don, there are two words that make me want to just puke, and one of them is lean, and one of them is kaizen, and they’re both up there on your slide.”

It was one of the best value-stream-mapping processes I’ve been a part of. The highlight for me was on Friday when Bob came up to me and said “Don, I appreciate this so much. This is so different from what we have done in the past, and I can see all of the opportunities that are out there for us.”

So we stopped the presentation and had a 45-minute discussion about their prior experience with lean. It was a huge gift from Bob, frankly, because I had no idea about that. So I threw my presentation out, and we chatted about their past experiences and how my approach to lean was different. At the end of the meeting, I told them that if this team didn’t want proceed, that was an acceptable answer, but I would be very disappointed. Or, we can complete the valuestream process this week and re-assess on Friday.

Q.

Have you or the Armstrong management team been discouraged by the slow and intermittent pace of recovery in the housing market?

Lean applies whether you are in booming times or bust times. It doesn’t matter. At Armstrong, we are seeing phenomenal results with relatively flat markets today, and that’s making us a better supplier by improving quality and delivery with a much lower cost. When the market does pick back up, we are going to take full advantage. I am a firm believer that lean is a growth enabler if you truly focus on your customer.

Q. What do you like most about leading lean transformations?

It’s a blast. I told my wife I feel like I haven’t worked a day in eight years. I love seeing people develop and grow. I love to see the improvements through, and then be able to walk away and know the lean journey will continue.

-----------------------------------------------------Armstrong World Industries, Inc. is a global leader in the design and manufacture of floors, ceilings and cabinets with a focus on innovation, design and environmental sustainability.

In 2009, Armstrong’s consolidated net sales totaled approximately $2.8 billion. Based in Lancaster, PA, Armstrong operates 35 plants in eight countries and has approximately 10,000 employees worldwide.

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SEMCO Beats Low-Cost Competitors With a Focus on Service

CASESTUDY

Flexibility and responsiveness are attracting an increasing number of customers.

Tonya Vinas, freelance business journalist and former editor of Industry Week magazine

Client >

Solution >

SEMCO is a contract manufacturer of assemblies containing metal castings (conduit and cable fittings) and injection-molded components (covers for protection and weatherproofing). SEMCO consists of four plants in Pune, India, (copper alloy gravitydie casting plant, zinc pressure-die casting plant, aluminum pressure-die casting plant, and steel fittings plant); and one in Jaipur, India, (iron, copper and aluminum alloy sand-casting plant). SEMCO distributes its products through a centralized distribution center in Raleigh, N.C.

SEMCO focused on three areas to create a model to compete with cost-driven commoditization of its products: controlling costs through efficiency and quality improvements; creating a flexible-production model that lowest-cost producers can’t replicate; and building a U.S.-based lean-distribution model that enables customers to maintain adequate-yet-efficient inventories.

In 2002, SEMCO started using a variety of LeanSigma training, tools and techniques to revamp its business model based on these differentiators and has since become a preferred offshore producer (based on growth performance).

Challenge >

CASE STUDY

In the 2000-2001 fiscal year, SEMCO was manufacturing in the hundreds of tons of die castings a year and was struggling to do so. This worried the company’s senior leadership, which saw potential growth opportunities for up to 1,000 tons a year. The rapid rise of China as the lowest-per-unit-cost producer of the same products added heightened urgency. Not only did China’s emergence as a major competitor threaten longterm growth potential, but also current customer relationships.

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Results > By transforming into a unique provider with a low-cost/high-responsiveness/high-quality model, SEMCO has been able to achieve a 20 percent compound annual growth rate.

The company’s lean foundation also streamlines growth through acquisition and furthers substantial efficiency gains achieved during the past four years at its Indian plants, such as doubling productivity with the same assets.

• SEMCO is growing at about 20% CAGR because of its ability to compete as a low-cost producer with flexible fulfillment capabilities and multiple growth opportunities. The company can make any of its 15,000 products during any given week in variable order quantities.

• While growing, SEMCO has remained competitive on price through containing costs and keeping high-value knowledge and production assets in India.

Conversion costs as a percentage of sales have remained the same as the company has grown.

• SEMCO is able to be a “problem solver” for customers while maintaining its lowcost structure. This is in stark contrast to high-volume batch producers that can grow only by selling more units per employee. As a solutions provider, SEMCO is open to growth opportunities such as developing new products, entering new markets, and gaining new capabilities through acquisition.

A New Way of Manufacturing When China made its entrance into modern, global manufacturing earlier this century, she stole the show. All eyes were on this newly liberated producer as Chinese manufacturing plants flooded overseas markets with low-cost industrial goods. This baffled many manufacturing leaders, and some companies never recovered.

But Indian producer SEMCO, which makes fittings and weatherproof products for rough electrical applications, recreated itself in an Iron Man-like fashion to fight the low-cost devaluation of its products.

According to CEO Paul Hirt, the company’s formula for success — SEMCO is growing at about 20% CAGR — has three key elements: ongoing efficiency improvements; a

flexible production model; and the ability to help North American customers manage inventory for optimal profitability.

Another important aspect of SEMCO’s strategy is the location of its most expensive assets: All of its plants and productionfocused intellectual property are based in India, while customer-facing capabilities (i.e., service and distribution) are based in the United States. This keeps production costs low while providing a much higher level of service than competitors.

“We make commodity products, but because of our service and engineering capabilities, we are not a commodity producer,” said Hirt, who joined the company in 2007.

Five years prior to Hirt joining, SEMCO launched its LeanSigma-based revamp within its plants. The two biggest physical changes were transitioning from batch production to cells and reducing setup time through standard work (going from eight set-ups per day to about 40). This combination alone yielded significant improvements in quality and flexibility.

“The focus on single-piece flow forced us to get it right the first time,” explained Hirt. “In addition, when a quality issue occurs, we use the lean tools to take a systematic approach of asking why four times to get to the root cause and then implementing the corrective action to ensure that issue won’t repeat. By contrast, most of our customers who buy competitor’s products from China have had to implement rigorous incoming inspection processes.”

Flexibility is also unique to SEMCO as a low-cost producer in its market.

“We reduced our set-up time for each SKU so that we can make precisely the quantity the customer wants,” Hirt said. “It

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CASESTUDY

(continued)

doesn’t matter if it is 1,000 pieces or a halfmillion pieces, we will ship it out within a week. That allows us to maintain a four-tosix-week lead time with a low-cost structure.

This type of response is not currently available from our Chinese low-cost competitors.”

Plant-Level Results

Paul Hirt CEO, Sigma Electric Manufacturing Company

Focus on Customers: Flexibility and Responsiveness By reinventing itself as a demand-driven supplier, SEMCO gained another key advantage over its batch-focused competitors: Being able to help customers manage inventory for efficiency and performance goals.

SEMCO used lean methods and tools to re-align its supply chain. This was a crucial step to increasing overall customer value because SEMCO couldn’t be demand-driven without its suppliers being similarly aligned.

Changes included: • Moving from a monthly planning cycle to weekly with scheduling from fore casting based on actual point-of-sale data.

• Pushing quality improvements that ultimately yielded a 79 percent increase in supplier quality as measured in parts per million.

• Creating a pull system from suppliers to production and final shipment.

CASE STUDY

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Performance improvements at the plant level included: • Eliminating waste in manufacturing, assembly and packing processes by reducing work-in-process (WIP) from 22 days to less than four days.

• Improving quality in excess of 50%.

• Doubling productivity in four years.

• Doubling plant volume while reducing floor pace by 30,000 square feet.

Managing Times | Q1.11 www.managingtimes.com

With these changes, SEMCO was able to: • Improve fill rates from 65-70 percent to 93-95 percent • Reduce total tooling lead time from 120 days to 72 days.

These improvements have caught customers’ attention. SEMCO’s share of its major markets has grown by 10 to 20 percentage points over the past three years.

Today, it’s not uncommon for customers to send direct, demand-driven replenishment cues to SEMCO as product is consumed; and other customers outright rely on SEMCO to manage a portion of their inventory. Such arrangements take ongoing customer engagement, another thing SEMCO does well that its competitors don’t even attempt.

In 2009, Cooper Industries named SEMCO Asian Supplier with The Most Potential after one year of doing business with the company. It was the first time the award was given to a supplier after only one year.

Major Hurdles and Lessons Learned SEMCO’s lean efforts met the most resistance in its North Carolina-based distribution center. Hirt said attempts to implement lean systems there outright failed twice. Aligning finished-goods inventory management with customer pull was a must for the model to work. Leaders had to make it work.

Ultimately, they made leadership changes, assigned a full-time continuousimprovement specialist to the distribution center, and invested in a new software system that improved visibility and tracking of inventory (and therefore accountability).

Today SEMCO has one-half to one-third of the employees it used to have at the warehouse but is achieving the same productivity AND is able to offer services such as latepoint packaging to customers, Hirt said.

Hirt notes two other significant “lessonslearned” about doing business in India: Over-promising: One aspect of Indian business culture is to over-promise what can be delivered. “There’s a tendency to tell them what they want to hear.” This makes leadership gemba all that more important. “You really have to probe as to how you are going to fulfill the request and then you have to really monitor to make sure that is happening.”

Great debates: Lean can be successful in Indian plants, but achieving success can take longer because of the cultural propensity to debate and discuss topics much longer than is common in U.S. business. Hirt gives policy deployment as an example. Hirt, his direct reports and continuous-improvement leaders have been using policy deployment for three years, but unlike at a U.S. firm, where strategy deployment often quickly elicits “ah-ha” moments from long-time corporate leaders, complete buy-in is taking much longer.

“The first year was very disappointing,” Hirt said. “The second year was better, and in this third year, it’s getting better.”

Today and Tomorrow SEMCO continues to be growth-minded. LeanSigma is enabling this growth in two ways, Hirt said. First, one of the goals of the company’s strategy-deployment initiative has been to support new-product development, which is also employing Six Sigma tools.

“We have implemented a toll-gate process that utilizes a lean voice-of-the-customer approach to identify new product needs,” Hirt said. “Our first set of new products has been launched, and initial results look encouraging.”

SEMCO also is growing through acquisition. Having standard work and defined processes has made integration of new businesses much quicker and efficient, Hirt said.

“Lean has brought project-planning rigor that anticipates potential issues and leads to contingency and countermeasure planning,” he said.

As SEMCO grows, so will continuous improvement in all areas of the company.

Each plant is operating day-to-day without much upper-management direction, as are parts of engineering, tooling and site maintenance. Recently, lean teaching has begun in support functions. And, said Hirt, he is still pushing for ongoing breakthrough achievements.

“After doing lean for several years, it’s not always obvious what’s next to improve,” Hirt said. “We’re still getting improvements at the cell level, which is O.K., but getting breakthrough improvements is getting tougher. So I’m telling my team — go talk to people. Go talk to them about their best practices and bring them back to SEMCO.”

SEMCO’s goal was to become an offshore producer that North American customers would think was “an American company,” Hirt said. SEMCO’s application of lean to change its company culture and model was the most important factor in achieving this vision. While many industrial manufacturers continue to struggle against the siren’s song of lowest-per-unit costs, SEMCO has found a path not only to maintain market share, but also to grow at an exceptional rate.

Managing Times | Q1.11 www.managingtimes.com

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STRATEGICVISION

Making Friends with Risk

by Carl Deeley, Director, TBM Consulting Group, Inc.

Staring down the barrel of the longest

Carl Deeley Director, TBM Consulting Group, Inc.

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“Risk” is the possibility of loss or danger, with possibility on a sliding scale.

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recession in 100 years, two big themes pop into view, each with a huge potential impact on many fortunes: Innovation in a time of disruption, and the fear this strikes into the heart of so many business people.

We know some of humanity’s greatest advances are born of upheaval and disruption, such as the 1934 invention of the laundrette during the U.S. depression, which gave people the opportunity to make use of new technology (washing machines) without spending scarce capital. History teaches that when world economies are in flux, as they are now, it’s a great time to hit the market with fresh ideas. But global economic turmoil tends to make executive boardrooms more cautious than bold. Many of those who would innovate are hearing a lot of “no” and “not now”.

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Executives worry about taking a chance on something new, even though they know the inherent risk of letting their new-product pipeline dry up and being left in the dust. Therefore, now is a good time to review the disparate meanings of “chance” and “risk”.

STRATEGIC VISION

–––––––––––––––––––––––––––––––––– Let’s start with a tempting bit of Japanese cuisine: fugu. Also known as puffer fish, fugu has been served as a delicacy in Japan for centuries. In the 17th century, a few morsels of this tasty white fish could leave you with a faint tingling numbness on your lips and tongue as it slipped down your throat. Or it could kill you. It was a chance you took.

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“Chance” essentially means unpredictability. Anything could happen, as far as you’re concerned, because you lack some essential information that would make the outcome knowable.

Over the years, people found the source of the puffer’s toxicity -- tetrodotoxin – a rather nasty poison that paralyzes human muscle, leaving a victim fully conscious as they asphyxiate. There is no known antidote, but people still wanted to eat fugu because it was delicious. So, Japanese chefs developed special techniques for cleaning fugu, isolating the poison, and serving it up to people interested in taking the risk.

“Risk” is the possibility of loss or danger, with possibility on a sliding scale. The more skilled your chef, the better chance you and your dinner companions will be smiling at each other with only partially paralyzed grins. These days, fugu is farmed and most of the fish now lacks the deadly toxin, so few are taking any chance at all. But the risky reputation allows those specially trained chefs to charge $50 per serving for the 10,000 tons of fugu eaten in Japan every year.

Risk usually means you have information about both the danger and reward, and you make an educated leap. This is exactly the kind of approach we need to new product development in uncertain times, but it must be based on solid, actionable information -and most companies have shockingly little.

Surveys? Focus groups? This kind of intelligence still leaves so many gaps in a company’s knowledge that most are taking chances instead of calculated risks when it comes to new products.

The problem is a lack of integration.

Let’s see if this sounds familiar. A campaign of intelligence gathering – surveys, focus groups – conducted by outside experts convinces your marketing leadership that customers want functions x and y added to

chance & risk

Despite the risks, the fugu fish is considered a special delicacy in Japan.

your current product, and they want it in blue. This information is dropped onto the desk of someone in engineering, perhaps, who designs a new product based on his interpretation of the data – surely marketing wanted functions x and z – and passes it off to production, who sends it back to engineering for clarification. After a few rounds of general grumbling, they come to some agreement on what can be produced and eventually, the object is forwarded to sales. It might bear some passing resemblance to the original idea, but it’s been passed around and reinterpreted so many times, it is unrecognizable to the original focus group. With every iteration of the pass off, valuable information has been lost.

In a lean business – which is to say, a business that focuses on value to the customer above all else, without undue waste, delivered in a timely fashion – each step in the process is integrated and all work is accomplished by a cross-functional team.

The team begins not with a readymade design, but with the voice of the customer.

This might include some kind of direct interaction between team and customers, as well as market research, field observation, crowd sourcing, and the like. In general, the design work occurs in phases. While customer participation typically drops off as the design takes shape, a lean approach keeps them around during development in order to qualify the actual design with real customers.

What’s remarkable is how much an integrated team reduces the dreaded rework loops that plague most new product designs.

Consequently, lean design teams typically do a better job of satisfying the needs of the targeted market, which leads to achieving the forecasted sales.

When design groups include the voice of the customer into the product design process, they move the bar from chance to risk. And every additional piece of data Managing Times | Q1.11 www.managingtimes.com

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STRATEGICVISION

(continued)

moves that bar further. A smart company that decides it wants to make a threewheeled vehicle, for instance, does not start by asking whether the vehicle should be green or blue, have retro or futuristic styling.

The smart group begins by asking what a consumer wants in a vehicle, where they live, and how they like to travel. Does their vehicle represent a conveyance or is it a reflection of the consumer’s own personality?

When we reach this far into the question of what a customer wants – and then really listen to the answer – we’re including the customer’s view in every aspect of the product.

We are, in fact, allowing the customer to challenge our ideas of a good product. And if it turns out they did not want a threewheeled vehicle after all, it may be a blow to the ego of our visionary engineers, but, more importantly, it’s a big reduction in the risk we’re taking.

People are herding, collective creatures.

Our opinions and ideas change in waves. So, when a market downturn drastically reduces the income of a significant percentage of our fellow citizens, suddenly it just seems better to buy fruit from giant boxes, rather than having each piece preciously wrapped, even if the buyer’s own income was not affected.

The discount grocery chain Aldi is certainly an example of a company that knows its customer. It’s using the current belt-tightening atmosphere to introduce itself to more markets. In 2009, the company announced its intention to build 30 new outlets a year, plus two large new warehouses, and double its market share while keeping an overall strategy of stocking less variety at cheaper prices.

A smart company is one in which every-

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one’s job is to serve the customer. That also means knowing the customer, both individually and collectively, as a market. Ultimately, the people who buy our products help us reduce risk, if we let them. But let’s be clear: There is no such thing as eliminating risk.

We can avoid the stomach-churning carnival ride of chance by inviting customers into the new-product design process and integrating our functional areas into one team, but for every company that wants to stay relevant, risk is a constant companion.

In my opinion, this time of turmoil presents us with great opportunities.

Consumers are familiar with the change that’s all around them and are open to fresh ideas for dealing with today’s challenges.

Now is an excellent time to make friends with risk.

-----------------------------------------------------Carl Deeley recently returned from a two year engagement as Managing Director of TBM Australia and Asia Pacific. He is a specialist in lean value chain design and implementation.

He has over 20 years experience with lean implementations and business process improvement across multiple functional areas. He was a featured speaker most recently at the "Innovate 2010" conference in Sydney, Australia.

You can contact Carl at cdeeley@tbmcg.com.

TBM Names Milbank Manufacturing Company Seventh Annual “Perfect Engine” Site

LEANCHAMPIONS

Electrical Meter Socket Manufacturer Recognized for Operational Excellence

TBM presented Milbank Manufacturing

(Left to right) Eric Krichbaum, Senior Vice President of Operations and Chief Operating Officer, Milbank Manufacturing receives the seventh annual TBM Perfect Engine Site Award from Anand Sharma, Chairman and CEO, TBM Consulting Group, Inc., at the TBM LeanSigma Global Summit in Las Vegas, Nevada on September 16, 2010.

development and retention of people to continuously improve our value delivery system," said Krichbaum.

“We are very proud of Milbank because they defined a management vision and drove that vision throughout the organization by embracing LeanSigma tools and rapidly driving sustainable improvements in quality, cost, and delivery,” said Anand Sharma.

Results Summary Milbank is now using liberated cash and space to invest in a new alternative energy solutions business.

• Lead times reduced by 53 percent • Over $3.5 million in free cash generated from reductions in work-in-process and finished goods inventory.

• Able to support market expansion with current facilities by liberating 100,000 square feet of floor space in manufacturing and storage facilities

LEAN CHAMPIONS

Company, the industry leader in the manufacture of electrical meter sockets, with the seventh annual “Perfect Engine Site” award, recognizing the Milbank Kansas City plant for its commitment to “lean” excellence in manufacturing.

“The Perfect Engine” refers to the precision interworking of human resources and physical assets to achieve outstanding productivity results that create business agility, growth and profitability.

“The Perfect Engine Site” award recognizes individual plants or offices that have successfully implemented a LeanSigma® transformation and demonstrated innovation and outstanding teamwork.

Anand Sharma Chairman and CEO for TBM, presented the award to Eric Krichbaum, Senior Vice President of Operations and Chief Operating Officer at the LeanSigma Global Summit in Las Vegas, Nevada. Mr. Krichbaum accepted the award on behalf of Trace Tandy, the plant manager at the Milbank Kansas City facility. The Kansas City plant began its LeanSigma journey in 2007 after creating an overall vision and direction that required the facility to focus on operational excellence in order to become more agile and efficient. Over the past two years, the Kansas City facility conducted over 30 kaizen events focused on critical shop floor and business process areas.

"We committed to a cross-functional approach for achieving our strategic objectives.

By focusing on lead times, set-ups and stock availability, we are now able to accommodate customer needs for variety. At the same time, we reduced inventory and significantly improved our cash position in spite of the recent recession. I am inspired by our accomplishments and humbled by the improvement opportunities that lie ahead.

Most importantly, we’ve invested in the

Managing Times | Q1.11 www.managingtimes.com

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ACCELERATEDLEARNING

Why Lean Programs Fail

By Joe Panebianco, Director, LeanSigma Institute

The lure of a continuous improvement

Joe Panebianco Director, LeanSigma Institute

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Unfortunately, very few continuous improvement programs succeed in transforming the company.

ACCELERATED LEARNING

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(CI) program is irresistible… When done right, such programs can deliver revenue growth and income three to five times the competition. Eliminating waste and excess inventory can add millions of dollars in profit to an organization’s bottom line. There is an added benefit of enhancing a company’s public image: “Continuous improvement” and “lean initiatives” have become such buzzwords over the past 15 years, that companies noted for using these techniques are frequently perceived as being cutting edge and resource savvy. And with a weakened economy and uncertain projections for recovery, many manufacturing companies are looking to CI techniques as a way to remain profitable and weather a rough period. As a result, many companies—almost 67% according to an Industry Week survey— operate some type of continuous improvement program.

Do continuous improvement programs really play such a critical role in the success of an enterprise? Some companies that implement CI programs fail to gain traction and quickly abandon their improvement efforts. More commonly, a company’s continuous improvement program will deliver some type of benefit—usually short-term— to the organization. Unfortunately, very few CI programs succeed in transforming the company. Keith Yeater, a veteran TBM consultant, explains, “Lean manufacturing and continuous improvement are as much a cultural transformation as an operational adjustment. In order for the transformation to occur, the entire organization must understand the reasoning behind the change…

Without this understanding, people struggle to drive, let alone support and sustain, the transformation.”

Implementing a truly successful continuous improvement program requires transforming an organization’s mindset to one that embraces a culture of continual selfexamination, review, and modification. This type of change is difficult to implement because it is transformational: it requires eliminating old ways of thinking, developing and reinforcing new behaviors, and, simply put, is scary. It is human nature to fear change because change requires us to move out of our comfort zones, try new things, and enter unknown territories. For senior management teams, this type of transformation can be particularly frightening because they are stewards of the organization, responsible for a company’s future, its reputation in the marketplace, and the welfare of its employees. Embarking on this type of transformation journey without a guarantee of complete success is daunting for most companies.

So what is holding back potential CI programs? How can an organization take lean to the next level? What are the hurdles that have to be cleared in order to maximize the impact of a CI program?

There are as many different answers to these questions as there are continuous improvement approaches. Like CI programs themselves, the problems that plague these initiatives and the reasons why they are susceptible to failure are many and varied.

However, when you talk to experts who have spent their careers advising companies on cultural transformations, several common themes emerge. Though the reasons why a given program fails to yield significant results or gain traction are unique to that program, the primary obstacles to success can be classified under the following problem areas:

1. Lack of Leadership.

Assimilating a continuous improvement program into an organization’s culture requires large-scale, transformational change. Many companies think that by rolling out a CI program to its employees and throwing in a few incentives, such programs will automatically take root and employee behaviors will change over night. This is not the case. CI programs require a culture shift, and changes of that magnitude need to be strongly led, with senior management fully committed to the change and modeling the required behaviors.

Without executive leadership continually reinforcing the new CI culture, employees will revert to old habits. “Without clear direction and leadership, the change will falter,” explains senior trainer and design specialist Gary Rascoe.

2.

Lack of Focus. Another common reason why CI transformations fail to take hold is a lack of focus. Senior management, as well as the entire organization, may think they are committed to making lean work, but if management cannot articulate a clear vision of why CI is important, or the organization has other major initiatives going on at the same time, the undertaking will fail.

Likewise, starting a continuous improvement journey, then temporarily putting things on hold until other conditions change, sends the message that management is not clearly focused on the end goal.

3. Insufficient Resources.

Allocating the appropriate resources to a project may seem like Management 101, but it is another area where organizations frequently stumble and fall short on their path to continuous improvement. Ken Koenemann, managing director of consumer products at TBM, advises clients, “If you can’t resource an

metric is established, companies forget to question whether the metric is necessary or if it ties to the corporate initiatives in any meaningful way.

5. Underestimating the size of the task.

activity sufficiently, then change the scope.

Take two bites rather than one, or if that’s not possible, fall back and regroup until you have the firepower to succeed. If you don’t do this…the organization concludes that the improvement methodology doesn’t work.”

Questioning the effectiveness of lean tools and continuous improvement programs has been a hot topic in the manufacturing world lately. However, any program will be doomed to failure if it is not given the resources to succeed.

4. KPIs don’t link to CI and Corporate Initiatives. Again, you may be wondering how an organization could make this mistake. But in a data-driven world, companies overwhelmingly find themselves tracking a multitude of metrics across multiple product lines and in various stages of the manufacturing process. “Clear measures and clear results, ultimately tied properly to cash flow and profitability, are necessary to sustain lean transformation,” confirms TBM Executive Vice President Bill Schwartz. How to determine the relevant key product indicators, and then connect those indicators in a meaningful way to the organization’s CI initiative, is the challenge. It is not unusual to walk into a client and find the organization tracking irrelevant metrics. However, once a

Lastly, continuous improvement initiatives often fail because the size of the task is grossly underestimated when it is first undertaken. This is particularly true if a company has launched its CI program in response to growing market or industry pressures. In such cases, these organizations are implementing CI as a “Hail Mary Pass”—a quick fix to a problem that is plaguing their processes. Such companies will have a tendency to declare victory too soon—celebrating success at the first signs of improvements—and thinking they have mastered the fine points of a CI program, they may cutback on education and advice too soon and fall back into their old ways without even realizing it.

-----------------------------------------------------Joe Panebianco is a senior management consultant and director and team leader of the TBM LeanSigma Institute. He is a former operations manager with broad manufacturing and business experience and is sought after for his team-building and leadership skills and his ability to help clients visualize and develop transformational plans. Contact Joe at jpanebianco@tbmcg.com or follow his blog at www.tbmcg.com/blog.

Managing Times | Q1.11 www.managingtimes.com

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MANAGING

TIMES

TBM LeanSigma® Institute 2011 Schedule Highlights

Brazil São Paulo 55.11.5051.7490 China Pudong, Shanghai 86.21.6888.6671 France Lyon 33.472.91.32.88 Germany Frankfurt +49(0)69.710.455.172 India Gurgaon 91.124.437.5995 Mexico Monterrey 52.81.50.00.91.36 United Kingdom Derby 44.1332.367378

KAIZEN TRAINING Kaizen Breakthrough Experience Participate in a live Kaizen event at a lean manufacturing site. Experience the dramatic bottom-line improvement and efficiency you can quickly achieve and sustain as your kaizen team implements lean tools in an actual business operation • February 21-25, 2011 at SSP FITTINGS in Twinsburg, OH • Go to www.tbmcg.com/kbe for more information, to select your kaizen team and register for the workshop.

LEAN CONFERENCE Lean Sigma® Global Summit Save the Date! Don’t miss this extraordinary opportunity to immerse yourself in innovative, strategic thinking that will transform your continuous improvement initiatives. Breakout sessions with rich content in four tracks.

Ample time for networking and learning.

• September 21-22, 2011 – Las Vegas, NV at the Green Valley Ranch Resort.

• Go to www.tbmcg.com/GlobalSummit for more information about our early bird specials.

TRAIN THE TRAINER Kaizen Instructor Training – Manufacturing Operations Four days of critical shop floor kaizen instructor training that will set the foundation for dramatic improvement and successful culture change at the start of each kaizen event. Learn advanced instructor presentation, training and teaching skills.

• March 15-18, 2011 in Durham, NC • Go to www.tbmcg.com/kitmo for workshop details and register for the workshop.

CONTINUOUS IMPROVEMENT OFFICE ESSENTIALS Creating an Effective Continuous Improvement Office This four day workshop will give you the strategies, tools and skills required to quickly establish a highly-effective kaizen promotion office, confidently chart your path of lean improvement, maintain and build momentum and achieve dramatic, sustainable results.

• April 12-15, 2011 in Durham, NC • Go to www.tbmcg.com/ccio for more information and online registration.

TBM EVENTS Throughout the course of the year, TBM is involved in several events that may be of interest to your continuous improvement journey. Please make note of the URL below and check back regularly to see the conferences, webinars and speaking engagements we have scheduled.

Go to www.tbmcg.com/events for more information.

TBM Consulting Group, Inc. 4400 Ben Franklin Blvd.

Durham, NC 27704 www.tbmcg.com

Corporate Headquarters Durham, North Carolina 800.438.5535

PRESORTED FIRST CLASS MAIL US POSTAGE PAID RALEIGH, NC PERMIT #2483

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