Q1 2010 Managing Times

Q1.10

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

Lean Labs at Roche Carolina Define Good Manufacturing Practices

8 Using Leader Standard Work

12 Executive Insights from Identity Group CEO, Patrick Spear

15 Obtaining Government Training Grants

PUBLISHER’SNOTE

Inspiration Comes in Many Forms

Just as a shining example provides inspiration and encouragement that others can follow, a giant misstep offers an opportunity to reflect and learn and inspire us to do better. The press has blamed Toyota’s quality failures on its never-ending drive to reduce costs through the elimination of waste and streamline material flow, what we call lean manufacturing. The Toyota Production System is not the culprit. The quality issues, which are not isolated to a single design flaw or vehicle, prove beyond a doubt that the new CEO and his executive team lack the dogged determination for excellence and quality focus at every facet of the manufacturing process that the company’s automotive pioneers made legendary.

Unfortunately these pioneers are either dead or retired. Toyota CEO Akio Toyoda, who wasn’t even born when Taiichi Ohno started the company’s original lean transformation in the early fifties following his famous pilgrimage to Detroit.

In the world of continuous improvement we never let a good crisis go to waste.

Just as we have sought inspiration from Toyota’s rise from a regional automaker to one of the world’s largest and most profitable corporations, we should seek inspiration from Toyota’s recent missteps.

This is an emphatic reminder to never take our focus off of customer satisfaction and the pursuit of quality and reliability, or to ignore problems that surface until they mushroom beyond control.

In this issue, our consultant, David Pate, inspires us with his column, “Problems are Treasures.” He talks about the fact that problems are not something to be avoided, blamed on others, ignored or hidden.

Remember the old adage, “No problem is a problem.”

Throughout this issue are inspirational stories about things many of you, our clients, are doing to make a positive impact on your business. An underlying theme in every article is leadership focus on their personal standard work. As leaders, it’s easy to say, “My day is different. I can’t adhere to

standard work.”. But that’s not true.

McCain Foods and Hayward Pool Products have implemented leader standard work at the plant level. They are building a disciplined management system that defines standard work, rewards correct behavior, ensures an audit process and holds people accountable. Greg Anapol, talks about the standardized management process they use with the Brady Business Performance System. Their commitment to strategy deployment has helped the company to integrate 30 acquisitions since 2003, implement lean at 34 sites, align each business to organization goals, sustain improvements and increase collaboration.

I hope you’ll enjoy our newest feature, “Leadership Insights.” Our first feature highlights Patrick Spear, CEO of the Identity Group. A sales and marketing professional first, he was once skeptical that lean would benefit his company. Today he sees lean as the enabler of growth and profitability. His leader standard work includes a quick morning check of his deployment dashboard followed by a walk around the shop floor and a series of regular calls with staff members.

This issue of Managing Times is filled with morsels of inspiration, fresh ideas and helpful hints. I hope you’ll find the fuel you need to forge ahead and scope out the standard work you need to drive sustainable results, inspire your workforce and plant the seeds for profitable growth.

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

Q 1. 1 0

MANAGING TIMES A publication of TBM Consulting Group 4400 Ben Franklin Boulevard Durham, North Carolina 27704 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 Angela Scenna: ascenna@tbmcg.com Featured Columnists Marty Abbott Carl Deeley David Drickhamer David Pate Contributors Greg Anapol Doug Bonner Brian Henriksen Joe Kuehler

Gary Rascoe Anand Sharma Tonya Vinas

Angela Scenna Melissa Slater Patrick Spear Tracy Taylor

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: Roche QC labs implement 5S principles to achieve zero observations in their most recent FDA audit.

LEANCOMMUNITYNEWS

M

ike Daw has been appointed Continuous Improvement Manager at Visiogen in Irvine, CA…Clint Belinsky has been appointed Global Vice President of Lean at MEMC in St. Peters, MO…John David has been promoted to Director of Lean and Safety at Pulse…Chris Wilson, Deployment Champion Director, retired from Amway in January 2010…Teresa Hay McMahon assumed new duties as Deputy Director of the Iowa Department of Economic Development in February 2010…Michael Pope was promoted to Director of Continuous Improvement at Franklin Electric. He will serve the entire company and work proactively with all business units at Franklin Electric to train people in the use of lean and six sigma tools as well as concept and implement an ongoing agenda of CI events. He will report directly to Scott Trumbull, Franklin Electric Chairman of the Board and Chief Executive Officer…Rod Van Wart, CBO / CPM for the City of Des Moines, shared with us that a kaizen project they completed with Drake University and the help of TBM consultant Jim Scott, won national recognition by the Certified Public Managers…Patsy Wilber, Continuous Improvement-Ritter Lead, Joe Ayette, Executive Director of North American Operations, Mike Schaufele, Director Continuous Improvement, and Kevin Hogan, Vice President of CI, of Hill Rom are spearheading the transformation of “hospital bed” manufacturing which will help the company to become world class in the areas of cost, quality, and delivery while reducing inventories significantly…Shivani Garcha, Continuous Improvement Internal Consultant – Materials and Gerry Doyle, Continuous Improvement Director – Materials of Genzyme, continue to make inroads into the materials part of the value chain with significant improvement in incoming receiving and inspection, as well as pick, pack and ship. They are now targeting improvements within the procurement functions…Earl Ratcliff, Pella Corporation, is working with Emergency Response Services

for Latin America (ERSLA) to create systems to improve communities and save lives. Just a few days after the earthquake in Haiti, ERSLA begin working on a project to distribute chlorine generators to areas most in need in the devastated country. They raised money for 50 units and placed them in tent cities in Port au Prince and in hospitals managed by Doctors without Borders.

Congratulations to our most recent graduates of TBM Lean Certification: Brian Wilkins, of Roscoe Steel…John Kolman and Steve Sweers of Amway…Heather Allen of Harsco Track Technologies…Brent Hickman of The Identity Group… David Hensley of Seaman Corporation...Steve Jorgenson of Trail King…Lappies Labuschagne and Greg Grisez of GrafTech…Bruce Charsky of CertainTeed Corporation…Matt Jacob of Saint-Gobain Abrasives…Michael Suarez of Mitsubishi Power Systems…Luca Corno, Vincent Gerdes, Shaun Morningstar, Elvin Sterling, Brian Sobyak, Simon Thompson, Dale Novak, Stephanie Kuznik, Anne L’Her, Emiel Ordelmans, Marco Pasqualin, and Tina Varga of Owens Corning…Diego Ibarra, Jorge A. Garza, and Christian Eden of Woodcrafters…

Erick Perez of Vidriocar and Adolfo Villarreal of Copreci…

Managing Times | Q1.10 www.managingtimes.com

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Lean Labs at Roche Carolina Define Good Manufacturing Practices By applying lean tools, such as 5S and visual management, Roche Carolina laboratories

CASESTUDY

set the standard for quality control and help the company respond to market demand for critical drugs like Tamiflu®.

By David Drickhamer, freelance editor with Tracy Taylor, QC Lab Manager, Roche Pharmaceuticals and Doug Bonner, TBM Senior Management Consultant

Client The Roche Carolina campus (www.rochecarolina.com) develops production processes for and makes active pharmaceutical ingredients (APIs) and intermediate drug compounds. It is a division of the global pharmaceutical company, Roche, headquartered in Basel, Switzerland.

Challenge Rather than follow the minimum guidelines for pharmaceutical production enforced by the U.S. Food and Drug Administration, the managers at Roche Carolina have chosen to set the standard for best manufacturing practices. This case study looks at what they have done in the QC labs using 5S and process standardization to both meet regulatory requirements and release product as quickly as possible.

Solution Lab associates implement 5S principles, sorting material and equipment into what’s needed and what’s not, setting everything in order by storing it in common and highly visible locations, standardizing labels, and driving sustainability with daily, weekly and monthly checklists. Combined with frequent communication between departments, the improvements in the QC labs contribute to the successful production ramp up for the unexpectedly high demand for Tamilfu®.

W

hen it comes to pharmaceutical manufacturing, the U.S. Food and Drug Administration (FDA) inspects facilities on a two- to three-year cycle for conformance to “good manufacturing practices.” Intentionally vague, the regulations recognize the fact that the best manufacturing and quality control practices are constantly evolving (see box below). Rather than follow the FDA’s minimum guidelines, the quality team at Roche Carolina (www.rochecarolina.com) have chosen to lead the way.

“Being regulated, that first impression is absolutely enduring,” says Tracy Taylor, Manager of Quality Control at Roche Carolina. “When the FDA walks in, I literally have 10 minutes notice. They arrive at the front gate, security calls, and we bring them in. If they come into a place that’s a mess, their impression will be that this is not a well-managed lab. On the other hand, if it looks stellar, if it’s clean and organized, that’s another story.”

This case study explores how Roche Carolina has applied 5S, one of lean manufacturing’s core tools, to a laboratory environment. By emphasizing workplace organization, order and cleanliness, 5S helps employees do their job more efficiently and effectively. How Roche went about

implementing 5S in a laboratory setting offers some valuable lessons to others implementing visual process improvement methods beyond the factory floor.

Eye of the Beholder Taylor’s team of nine analysts works in five labs where they test incoming raw material and final products. They follow a well-defined test protocol for each active pharmaceutical ingredient (API) and intermediate compound, which after release are shipped to other Roche facilities for final formulation. Taylor has worked with the QC labs to implement 5S and update standard operating procedures. Their efforts have paid off in a variety of ways. Achieving zero observations on its most recent FDA audit, the head investigator even used the laboratory’s practices and processes as an example for junior investigators of what to look for in a well-managed QC lab.

Results The QC labs achieved zero observations following their most recent FDA audit. The inspectors even used the laboratories’ 5S processes to train their staff in best manufacturing practices. From a customer point of view, testing lead times remain constant at industry-leading levels of less than five days, despite a five-fold increase in output for critical drugs.

SORT 2

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SET IN ORDER

The analytical laboratories are outfitted just as you would expect, with benches and a variety of instrumentation, and tons of storage in cabinets and drawers. Analytical test capabilities include high-performance liquid chromatography, gas chromatography, XRF spectroscopy, infrared spectroscopy, mass spectrometry, particle size analysis, wet methods, titrations, and more. Applying the 5S principles in this setting proved to be no more difficult, and just as beneficial, as it is in manufacturing areas.

Sort – During the initial 5S implementation, the defining question is, “Do we need it, or not?” The question is asked of equipment, materials or consumables. If the answer is no, it’s disposed of. “We freed up so much space because everything was all over the place,” recalls Taylor. “We discarded a bunch of stuff, and found stuff we didn’t know we had.” This included many high performance liquid chromatography (HPLC) columns that are used to separate drugs from impurities, which cost upward of $600 each.

Set in order – During the sort process, if the answer is, “Yes, we need it,” the equipment and materials are moved to a logical place and labeled or otherwise identified.

SHINE

This is where taped lines on the floor and shadow boards for frequently used tools often come in. In the labs they moved gloves, which people had been hoarding in various cabinets and drawers, to a standard location in each of the five labs, and they mounted the HPLC columns on wall racks.

Shine – Roche implemented the cleaning and housekeeping aspect of 5S through daily, weekly and monthly audits in each laboratory. Detailed checklists included dusting shelves and cleaning floors, as well as maintenance items such as requesting repairs to lights and fans that aren’t working. Guest inspectors from elsewhere on the Roche campus brought a fresh set of eyes and offered their comments and feedback.

“The key when we first started was that management was involved,” says Taylor. “It wasn’t just the analysts. My director came on audits, made comments and was very involved to show how important it was.”

Standardize – Instrument status log books record equipment qualification, maintenance, repairs, and operational data. When they started to implement 5S in the labs these log books were incomplete, they were stored in different locations, and some needed data was stored elsewhere. As part of the standardization process, they bought new log

STANDARDIZE

books and put them in a defined place in each lab so everyone would know where to find them and what instrument they went to.

Roche also standardized how they labeled containers of chemical mixtures.

Previously everyone had been doing it their own way. They had easily removable, custom labels printed and required that each label be filled out completely by whoever had mixed the containers’ contents. The labels were then checked as part of the daily audits.

Sustainability – “Anyone can go in and do 5S, but if they don’t have the sustainability part of it, they’ll be doing it again and again.

It’s a continuous process; you don’t just do it and forget about it,” says Taylor. After six months, Roche cut out the weekly audits and rolled those activities into the daily and monthly checklists. Making a 5S project part of every analysts’ annual objectives has been another key to sustainability. “One of the important parts of 5S is accountability,” he adds. “If you’re working in a laboratory that’s clean, you will have more ownership. You will be more accountable for keeping it clean. I don’t have to go in the lab and tell people to pick up their stuff. It has become self policing.”

SUSTAINABILITY Managing Times | Q1.10 www.managingtimes.com

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CASESTUDY –––––––––––––––––––––––––––––––––– When visitors tour Roche Carolina, they invariably visit the quality control labs. The typical comment, Taylor reports, is that it doesn’t look like anyone works there. There aren’t a lot of vials and flasks and papers lying about. It looks sterile, as it should. By comparison, the labs, now 15 years old, look just as good as another lab on the site that went through a major renovation last year.

–––––––––––––––––––––––––––––––––– 5S Supports a Culture of Excellence Roche Carolina has a comprehensive operational improvement program with green belt- and black belt-certified employees who’ve been formally trained in a variety of lean and Six Sigma tools. Following the example set in the laboratories, they have rolled out 5S in manufacturing, in the pilot plant where new production processes are tested and perfected. The area where they perform drug stability tests, for example, have been cleaned out and outfitted with only the liners and containers required to perform the designated tests.

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Roche also conducts regular Kaizen events. These are typically one-week improvement projects that target a particular process, drawing on team members from a cross-section of departments to analyze and make immediate process changes. A recent event reduced the number of handoffs and thereby improved the efficiency of providing all of the documentation required for each shipment. One of the key metrics here is the amount of time between when product is produced and the time when it’s released for shipment. Compared to a two- to threeweek lead time in the past, today the lab consistently tests products for release in just over six days.

“This contributes to lower inventory requirements, higher throughput and the fast shipment of high-demand drugs,” says Doug Bonner, TBM senior consultant who has worked with Roche Carolina on a number of projects. One of these was the logistics processes for Tamiflu®, demand for which spiked with the onset of the H1N1 flu virus.

“We helped them establish key metrics, set up visual boards and an online tracking system for reporting batch status,” he reports.

At the beginning of the year, before the flu pandemic was declared, the company hadn’t planned for extraordinary production volumes for Tamiflu because they had a sufficient quantity in stock to meet the typical demand caused by seasonal flu, according to Taylor. Ramping up production required a lot of coordination and communication between suppliers, manufacturing and logistics. Taylor’s labs did their part by maintaining consistent release times despite the significant volume increase.

“Even though the workload went up five-fold, the testing time stayed the same or was slightly less. That was driven by 5S and other efficiency improvements,” he concludes.

Current Good Manufacturing Practices: A Regulatory Scheme that Requires Continuous Improvement The U.S. Food and Drug Administration (FDA, www.fda.gov) regulates pharmaceutical manufacturing operations under the authority of the Federal Food, Drug, and Cosmetic Act. It ensures the quality of drug products by monitoring drug manufacturers' compliance with Current Good Manufacturing Practices (cGMPs) regulations. As noted by the FDA, “adherence to the cGMP regulations assures the identity, strength, quality, and purity of drug products by requiring that manufacturers of medications adequately control manufacturing operations. This includes establishing strong quality management systems, obtaining appropriate quality raw materials, establishing robust operating procedures, detecting and investigating product quality deviations, and maintaining reliable testing laboratories.�

Departing from more prescriptive regulatory models, the FDA maintains cGMP guidelines but the requirements are intended to be flexible, allowing companies to use the latest technology and management approaches to achieve superior levels of quality control through continual improvement.

The agency essentially leaves it up to manufacturers to determine and define what these good manufacturing processes are, and expects them to continue to push the envelope. Increasingly, in the lab and in the factory, these practices are incorporating lean manufacturing principles, methods and tools to protect the nation and the world’s drug supply.

Managing Times | Q1.10 www.managingtimes.com

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One Version of the Truth TBM’s new Dploy Solutions tool helps companies create a standard approach for

SPECIALFEATURE

managing the strategy deployment process.

By Angela Scenna, TBM Director of Marketing

L

ast year, TBM launched Dploy Solutions, a suite of web-based tools that lean organizations use to improve process, measure results and focus on initiatives that increase the bottom line. Since then, several companies have begun using the Dploy suite to create focus, enable visibility, drive accountability and achieve objectives.

We caught up with three senior leaders who are responsible for embedding a structured strategy deployment process at their respective companies: Greg Anapol, Vice President of the Brady Business Performance System at Brady Corporation; Brian Henriksen, Director of Strategy and Continuous Improvement, at Jason, Inc.; and Joe Kuehler, Corporate Director of Lean Enterprise, at Belden.

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“

Dploy gives us one standard way to deploy the PDCA cycle. We now have everything in one centralized location with one version of the truth.

”

~ Greg Anapol, VP Brady Business Performance System Brady Corporation

–––––––––––––––––––––––––––––––––– Make no mistake – software is not a substitute for an effective, committed process for managing policy (or strategy) deployment. It does however help companies to make the process more sustainable.

According to Greg Anapol, “Dploy gives us one standard way to deploy the PDCA cycle. We now have everything in one centralized location with one version of the truth.” Because they have one system and one application, everyone knows what 6

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they’re tracking, how the company is performing, and how to get back on track by using root cause and countermeasures when things go wrong. Brian Henriksen from Jason says the Dploy tools are making their PD process more sustainable.

We asked all three leaders if and how Dploy Solutions have contributed to the success of their policy deployment process.

Joe Kuehler of Belden says that they now have a visual process and a standardized way of pulling everything together. Just three and a half years into strategy deployment, he says that they started managing the process with Microsoft® Excel spreadsheets.

Management time spent maintaining spreadsheets, updating charts and making sure everyone has the right version is no longer an issue. “In the past, everyone had a different version and a different approach for managing the process. Now everyone follows the same templates and uses a consistent approach.”

According to Kuehler, Belden has 1,200+ global users on the system. Both executives and managers are using Dploy to track performance and monitor action plans.

Those who manage specific initiatives are going into the system regularly, monitoring dashboards and taking action. He says that the email notifications tell people what they need to do by when.” This way he says, “Nobody shows up at the monthly business review with an initiative in red having to explain that they were unaware something had been assigned to them. Folks don’t get embarrassed and stuff gets done now.”

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Greg Anapol recently co-hosted a webinar with TBM’s Bob Dean to discuss the Brady Business Performance System and their use of Strategy Deployment to achieve breakthrough results. You can listen to the pre-recorded webcast by visiting the Dploy solutions website: www.dploysolutions.com/bradywebinar

–––––––––––––––––––––––––––––––––– As TBM rolls out Dploy Solutions, they’re getting both positive and constructive feedback for system upgrades and enhancements. According to Kathy Million, director of business development, “Our user community is highly engaged and they provide constructive feedback on program functionality.” Kuehler says that most software companies sell you a package and then disappear. This isn’t the case with TBM and Dploy Solutions. He says, “They look at enhancement advice and make changes based on our input. Their changes are

helping to make the product more visual and more effective in supporting our efforts to manage the strategy deployment process.

The customer service has been amazing.

They’re always willing to do additional training for our teams and they’re easy to work with. They have performed above and beyond my expectations.”

At the recent LEI Conference in Orlando, Florida, Goodrich, a company now 15 years into its lean journey, talked about strategy deployment and how it is used to focus, link and align all levels of the organization with the company’s strategic objectives. The keynote speaker discussed how Strategy Deployment enables the effective facilitation of their key obligation to balance the needs of customers, shareholders and employees.

More and more organizations are turning to Strategy Deployment as they seek ways to better leverage their lean capabilities to drive sustainable growth. Dploy Solutions provides a systematic approach to effectively monitor, measure and sustain your improvement results. Learn more at www.dploysolutions.com or contact Ralph Moore at 800.438.5535 x833.

Screen shots of Dploy Solutions dashboards, strategy deployment matrix and bowler charts.

Managing Times | Q1.10 www.managingtimes.com

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Planting and Paving Using leader standard work to pave the way for a disciplined management system to lead

ACCELERATEDLEARNING

and manage in a continuous improvement environment

By Senior Management Consultants, Gary Rascoe and Carl Deeley

W ould you like to double or triple the

that drive meaningful behaviors and support our

effectiveness of your operations management

key performance metrics. Leader standard work,

team? Many team leaders and supervisors spend

the backbone of hour-by-hour, day-to-day per-

much of their time ‘firefighting’ vs. fire proofing

formance, is determined by “what needs attention

We often use the analogy of the movie Ground

now” to maintain or improve safety, quality, cost

Hog Day where the main character, Bill Murray,

and delivery metrics. We use it to drive critical

awakened everyday to the same problem.

activities for leader-to-associate interaction. By

Similarly, most supervisors and managers fall into

using leader standard work, managers identify

the firefighting trap – everyday there is another

areas for improvement, encourage associates to

fire to fight.

problem-solve, and provide positive reinforcement.

When you fall into that routine of reacting to what comes each day it is difficult to think about improvements. Working to standards is a pre-requisite to continuous improvement. Most leaders I know are very frustrated with this fire-

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“

The tools are the easy part. The

difficult part is building a disciplined man-

fighting routine and would welcome the opportunity to break out of it. The key differentiator for successful companies is their formula for leadership. Their management system is composed of tools and management techniques that reinforce a clear focus on the things that make a business run predictably and efficiently.

In order for this to happen we need to concentrate on and standardize our leaders’ activities

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agement system that defines standard work, rewards correct behavior, audits results and holds people accountable.

”

––––––––––––––––––––––––––––––––––

Five Key Ingredients of Leader Standard Work Leader standard work—helps management

4. There must be system audits. These

Five Stages of Lean Leadership

audits must be made easy by the use of simple

react in a consistent predictable manner; this in

visual controls such as the T-card process. People

Stage 1 (Lopsided) – Ninety percent or more of

turn creates the expected behaviors that character-

tend to do what is measured. If we are not

day characterized by firefighting and expediting

ize the business culture. There are five key ingre-

actively auditing the process, the perceived

materials

dients of effective leader standard work; overlap,

message is that it is unimportant. For example, if

visual controls, reward systems, audits and

we state that we have a 5S system or performance

Stage 2 (Low) –80 percent of day spent firefight-

accountability/discipline.

boards in place, but we fail to audit them, it

ing, expediting and attending meetings off the

choose. Synergy comes from the combination of

won’t be long before they disappear or become

floor. Occasional, but inconsistent use of SQDC

all five ingredients. Together, they form a recipe

meaningless.

boards and hour by hour charts.

5. Senior management must establish the

Stage 3 (Lean Light) – Sixty percent of the day

You cannot pick and

for change. Just like a cake recipe, if you leave out one or more of the key ingredients the system

discipline of following the system by walk-

spent on firefighting, expediting and attending

ing the walk, not just talking it. This means

meetings off the floor Audits at least one standard

1. Leader standard work must have overlap

active involvement and changing systems when

work per week and implements one point kaizen

from lower management to upper management.

needed. If we have audits in place, but there are

per week. SQDC and hour-by-hour charts used

If a line leader is responsible for filling out an

no ‘teeth’ behind them, the message will be that

regularly and properly. Continuous improvement

SQDC board hourly, the supervisor should moni-

they are unimportant. If we allow people to sim-

activity is still handled primarily by the continu-

tor the SQDC board several times a day, and the

ply go through the motions, or ‘pencil whip’ the

ous improvement office.

plant manager should check it daily. This detail

process, the system will fail. Once all of the

must be spelled out in the standard work for each

ingredients are in place, it is much easier to hold

Stage 4 (Lean/Green Basic) –40 percent of day

individual.

people accountable. Not every leader will make it

spent on firefighting, expediting and attending

successfully through the lean transition.

meetings off the floor. Audits at least three stan-

result will be a ‘flop’.

2. It must be visual at a glance to determine the status of the standard work. Simply telling

dard work documents per week and implements If you lay the gro u n d w o rk for right behaviors,

at least three point kaizens per week.

someone return a tool to its proper place is not

(overlapping standard work and visual controls at

nearly as effective as creating a shadow board for

all levels), supported by a management system

Stage 5 (Lean Leader/Mastery) –Twenty percent

it. If it is not visual, it probably won’t happen.

(audits, rewards, accountability and discipline)

or less of the day spent on firefighting, expediting

you ensure that basic tasks are ‘predictably’ taken

and attending meetings off the floor. All employe e s

3. The system must also reward desired

care of and break out of the Ground Hog

that re p o rt to leads actively submit and implement

behaviors such as abnormality management, root

problem pattern.

ideas for continuous improvement. MDI* activities

cause analysis and problem prevention vs. fire-

are fully deployed and SQDC board used as the

fighting. It is responsibility of senior manage-

primary measure of success.

ment to design the reward systems and culture to drive these behaviors. Similarly, there must be

* Visit www.tbmcg.com/MDI to learn more

consequences for those who choose not to follow

about Managing for Daily Improvement training.

the new standard. Without systems linked to performance, people will fall back into the habit of how they used to do things. The rewards need to be a combination of recognition and pay.

Publicly recognizing early adopters will send the right message to the CAVE people (Citizens Against Virtually Everything) and those that have a “wait-and-see” mindset.

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ACCELERATEDLEARNING Examples in Practice: Hayward Pool Products, Clemmons, NC We implemented the task card (T-card) standard work system at the Hayward Pool Products plant located in Clemmons, NC. Hayward had been on its lean journey for about 10 years but still faced the issue that most of their leaders’ time was spent firefighting. Managing for Daily Improvement (MDI) had helped but they were still struggling with getting people to be more proactive. When we approached Hayward about leader standard work, they decided to give it a try. Plant manager Don Alcorn, decided to pilot the process in their molding department. The injection molding department is the single largest department in the company with 160 employees. There are six supervisors, one rotational supervisor, six leads and one back up lead.

Since developing leader standard work, molding manager, Don Dial notes that the proactive activity of his team leaders and supervisors has doubled and has gone from 20 percent to 40-45 percent of their day.

The supervisors regularly complete between 85 to 90 percent of their standard activities on a daily basis. Don believes this is due to following a standard and becoming more efficient at managing the process. Results are similar to set up reduction or TPM (Total Productive Maintenance) events.

When we use tools such as spaghetti charts, we always see wasted motion. By organizing and standardizing, we develop a routine that reduces waste and frees time up to perform more value added activities.

The next step at Hayward is twofold.

Alcorn and Dial are planning to ”up the ante”, by increasing the number of continuous improvement activities (proactive) that are part of the standard work. The next step is to spread the leader standard work across all areas of production, including molding technicians and to other departments

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including assembly. As leader standard work is expanding plant wide, behaviors among all leaders should become more consistent.

When asked about the benefits of Leader Standard Work, Don noted that it helps to link all the lean processes together. He said, “We expect the ROI will be five-fold down the road as we improve how we utilize a lean management system for leaders. Leader stand a rd work is helping us sustain past improve ments and create a culture where continuous improvement becomes a way of life.

McCain Foods, Australia At McCain the lessons learned are very similar. McCain has linked leader standard work closely together with MDI (Managing for Daily Improvement). Their leader standard work is very specific and easy to audit. The company holds its supervisors accountable for these leadership activities.

A list of best practices learned from the McCain and Hayward implementations would be: • Leader standard work is an effective way to train new employees and get them up to speed immediately.

• Sequence the standard work activities as they should occur during the day and group cards accordingly. This will make the process faster.

• Define the six to eight most important focus activities for leaders. Define what provides the largest benefit to the company (Pareto Principle) and develop individual cards for each activity. These should be linked to the same activities we train in our MDI Process. Examples include: point kaizen, safety and ergonomic improvements, abnormality management, standard work, quality improvement, visual controls and 5S. Be specific on

what is expected. Writing standard work that is too generic will create variation and will make it difficult to audit.

• Just like any standard work, don’t let best become the enemy of better.

Review the standard work every 90 days or so and determine how it can be improved.

• If auditing reveals that the supervisor regularly completes the activity on time, then reduce the audit frequency for that item. Add other items that provide more benefit.

• Limit details of basic activities such as checking attendance and email. These can be written on one or two cards vs. having multiple cards.

• It takes strong leadership to make it work.

As we change leader behavior, we will begin to change the culture of the entire company. As sustainment improves, the focus will shift to continuous improvement.

Visual Tools for Leader Standard Work Most companies have a loosely defined standard work that is seldom referenced. When we monitor what supervisors actually do, it is dramatically different from the desired behaviors.

In fact, most supervisors spend the majority of their day firefighting and expediting – that is when they are not in meetings. We need to create an environment where the focus is on coaching, abnormality management, training and continuous improvement.

One way to prevent backsliding and drive accountability is to use “task cards” a visual management tool for leader standard work. A colleague of mine, John Alford, used them at Ford. Each card contains actionable behavior— what the leader should be doing. The cards are held in a rack for easy access and review. Each card has a red dot (to do) on one side and a green dot (completed) on the other. At the beginning of the day, all daily task cards show red dots.

During the course of the day, the manager turns the card over to show the green dot as tasks are completed. If there is a special reason why a task is left uncompleted, the card should display a third dot, typically yellow, at the bottom.

Anyone walking through the area can see at a glance what percentage of the tasks have been completed at any given time. If one leader routinely completes just 50 percent of the tasks and everyone else completes 80 percent, then that’s a signal that something needs to be addressed. It allows for intervention before problems get out of hand.

Additionally, the card should have a section for “reasons why,” similar to hour-by-hour charts.

A supervisor can use that as a starting point to get to the root cause of the problem.

Managing Times | Q1.10 www.managingtimes.com

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LEADERSHIPINSIGHTS

Free to Focus on Customers

By Tonya Vinas, freelance editor

Patrick Spear, CEO of The Identity Group, was once skeptical that lean would benefit his company. Today, he sees lean as the key enabler of growth and profitability.

Q: You had no experience with lean before taking on your current role. What made you believe?

It started with our financial partners [Saw Mill Capital] enlightening me about some of the things they saw that — perhaps because I was too close to the business or hadn’t experienced lean — I didn’t see. But when we really started digging in around improvements, the power of lean became clear. It was after our second kaizen event at our Cookeville [Tenn.] facility with improvements in flow, changeover, set up, and space allocation. I hadn’t experienced anything like that.

Q: What did you think about lean before that?

I was skeptical. I wasn’t sure how it was going to apply to us based on wiring — what I had been taught in prior years. There was a perception under past management that in a custom-product setting such as ours, it would be difficult if not impossible to go lean, and that lean applied only to stock-product manufacturing. But we have found it to be just the opposite.

Q: Can you give an example?

If you do the things that lean allows you to do, you can pick up business that others find unattractive because they are not lean.

That leads to all sorts of opportunities in the marketplace. We think about share growth and picking up incremental pieces of business based on this, and we don’t see that a lot of our competitors are doing the same.

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Q: Up to now, you’ve been a sales and

Q: Sales people often have a hard time

Q: You are a huge fan of policy deploy-

marketing guy. How do you like working with operations?

It’s been a really great experience, and quite frankly, one that I didn’t expect. My experience had been with manufacturing specifically, and not lean. The operations team gets out there and does it, and you [as a leader] support them and challenge them. But lean provides the opportunity to have an entirely different conversation with your operations team and enable a completely different level of empowerment.

accepting a lean transition. How did you get your sales team on board, and how do you continue to engage them?

It’s true you’ll get skeptics, a lot of people with the “show-me” mind set. But it came down to a couple of simple concepts – quality and lead time. They can now translate lean into what it means for the customer in terms of the enhanced customer experience.

If we have competitors who are quoting 15 days, and we can do it in 10 with enhanced quality, then the sales people have a better story to tell. If lean isn’t at the top of their list during conversations with customers, I challenge them to talk about how lean is changing how we are thinking and acting as a company. You can talk about products, and service, and design; but what it really comes down to is that we should talk about our ability to give customers what they want when they want it.

ment. How come?

It’s my nature personally and as a leader to go after several things simultaneously, perhaps to the detriment of the organization. I’m a high-energy adrenaline junkie who says “Let’s go chase it!” Policy deployment has required us to focus on those things that we are going to hold ourselves accountable to and to get the whole organization thinking about what we need to do to succeed.

Q: How did that change how you lead?

I had a traditional view of manufacturing, where the VP of Operations really drives everything. But when you look at manufacturing in a lean setting like ours — managers, supervisors, our KPO (kaizen promotion office) and our VP of Operations all work together. It’s much more liberating for me, and it makes my job easier. Because we’ve gotten away from our top-down focus, I have more confidence that they understand the concepts of lean and the transitioning of the organization to lean; and that they will stay on task. This frees me up so I can spend more time elsewhere adding value to the organization.

Q: How so, specifically?

I tend to think a lot about the customer experience and how I can enhance it. So much so that because I don’t have to focus on day-to-day operations management, I can go out and engage with the customer and find new ways to grow. That’s a direct correlation.

Q: Are you having more fun because of lean?

Yes. If we extract the current business conditions and look at our processes and work before we went to lean, there is no question. It’s a lot of fun. We are fortunate to have a financial partner that supports lean, and quite frankly, introduced us to it.

Q: Do others on your team feel the same way about policy deployment?

Everyone on my team has really embraced this process in terms of sitting down and determining what it is that we really believe, really hashing it out, digging in, and getting our hands dirty. It enables us to come out with a real commitment to what we have to do. We started with four specific initiatives in 2008. We had four in 2009; and now, surprisingly, we’ve narrowed it to three in 2010.

Q: It sounds as if the experience made you question how you ever succeeded without policy deployment. Is that true?

It really has. I can’t imagine, going forward, not using it in any business situation. If I ever found myself in a business where we weren’t using lean and policy deployment, the first thing I would say is “When do we start?”

Managing Times | Q1.10 www.managingtimes.com

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LEADERSHIPINSIGHTS

dard work. Let’s go.” But then I chuckle and realize I need to talk them differently to get them to do what I want them to do. But you’re right. You cannot separate your work life from your home life once you start learning about lean.

Q: Despite policy deployment, I’m sure you have a lot of things competing for your attention. How to you personally keep focused?

I’m a list-driven person. With all the stimuli and incoming messages, it’s a lot more difficult then when I used a paper-based day planner. Now, when I start my [Internet] browser every day, my deployment [dashboard] immediately comes up so I can see how we are doing against our [goals] and what’s coming up. Plus, I try to walk the shop floor everyday, and I have a series of regular calls [with staff members].

Q: Many times when people embrace lean in the workplace, they try to apply the principles to their personal lives with mixed results. How about you?

I’m married to a woman who, without knowing 5S, embodies every aspect of 5S. So I’m fortunate in that regard. But my children are in elementary school, and I’ve started thinking about their homework and chores in terms of standard work. I find myself having this conversation with them as if they are knowledgeable adults who understand lean. “Guys come on. Do your stan-

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Q: Do you think lean will be your legacy at Identity Group?

No, because this is a collaborative effort. It’s not about me, and it’s never been about me.

It’s about our customers and what we do for them. I have two quotes I’m fond of. The first is “Ego is the drug of stupidity.” I don’t know who said it, but I really believe that.

The other one is from [former U.S. Army Chief of Staff ] Gen. Eric Shinseki: “If you don’t like change, you’re going to like irrelevance even less.” Those two combined really speak to what I try to affect here, which is a focus on the customer, the need to change, and the importance of humility. Those are things we are trying to imbue, and lean is an excellent way to do that.

Obtaining Government Training Grants to Reduce Out-of-Pocket

FIELDNOTE

Kaizen Costs

By Guest Columnist, Marty Abbott, President of The IM Group, Inc.

M

ost people in business view government as a morass of bureaucracy and taxes.

What isn’t so obvious is that state, county and local governments truly would like to see your business prosper. And most governments are willing and able to put their pocketbooks behind their good wishes.

Even in these tough economic times, state governments are providing over $400 million in training grants each year to businesses to encourage more and better training. Although each state training grant program is different, it is usually a basic requirement that the training being funded provides significant skills upgrades, as occurs with external consulting fees for kaizen events such as those conducted by TBM. How the Process Works An application is filled out providing specifics about the company and the training program, with special emphasis on demonstrating why the training is critical to the company’s success. When a company does this in-house, the application process takes about three or four months, in our experience. From anecdotal evidence, it appears there is a this-is-a-pain-in-the-neck process with a dropout rate of about 67 percent, meaning that two-thirds of companies that start the application process never finish it.

The state agency that receives the application then takes a couple of months to review it. Approved companies receive a grant notification letter with an approved

dollar amount. Depending on the state, only about 25-50 percent of requested grants are approved. Next, the company does the training and requests a reimbursement. Within a couple of months of each reimbursement request, a check is issued to the company.

An alternative to do-it-yourself applications is to hire a consulting firm to manage the process for you. At our firm, we complete 100 percent of applications started and have a 99 percent approval rate (with 97 percent first-pass yield; three percent are re-submitted and two thirds of those are subsequently approved). We attribute our approval rate to (a) our expertise in knowing how the state wants the application prepared and (b) our work pre-selling the application by getting together with senior state personnel.

An Example in Action As an example of how we do it let’s look at Owens Corning. This is one of our largest clients and a large client for TBM. At Owens, over $600,000 in training grants have been acquired over the past year, averaging about $500 for every person trained.

The largest training component was TBM kaizen events.

At the Owens plant in Kansas City, a grant of $405,000 was obtained to cover 100% of the costs for three years training for 350 employees. This included a 100 percent recapture of TBM kaizen event costs.

At the Owens plant in Santa Clara CA the state provided a grant to train employees in lean manufacturing. The grant was for $196,400 for two years of mostly lean training including predominantly kaizen events.

How Can I Learn More?

Contact Marty Abbott at The IM Group for additional examples. Call 203.256.9494 or visit www.the-imgroup.com.

Marty Abbott is the Founder and Chairman of The IM Group.

His business career began after he received his Bachelors from Providence College and his MBA from Columbia University Business School.

His first company was General Foods Corporation followed

by Richardson-Vicks, now part of Procter & Gamble.

Following his corporate career Marty began an entrepreneurial career that included founding and eventually (successfully) selling his own company and buying six U.S. businesses for a British public company.

He has negotiated some large incentive packages over the years for companies such as American Standard, Trane Air Conditioning, Hubbell, Energizer and more. Over the years he has met with many economic development leaders, state heads of economic development and with the Governors of Arkansas, Colorado, Connecticut, Florida, Minnesota, New Jersey, Ohio and Texas. He is a recognized and requested speaker and writer on the subject of state, county and local economic benefits and incentives.

Managing Times | Q1.10 www.managingtimes.com

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CONSIDERTHIS

Problems are Treasures

By David Pate, TBM Senior Management Consultant

A

David Pate began in the 1990’s when his company worked with Toyota to implement the Toyota Production System. His career includes progressive levels of responsibility in operations at Collins & Aikman automotive where he served in multiple positions including director of lean manufacturing, director of planning and plant manager. In his role as Director of Lean Manufacturing, David led lean transformations for four large factories and implemented a program for lean supplier development. As plant manager, he utilized lean to drive and sustain significant reductions in defects and increased productivity.

He has worked in diverse industries with many TBM clients including McCain Foods, Bunge, Solae, Nike, Carlisle, Ansaldo and Amway to drive results, develop lean leaders, and implement sustainable culture change.

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ll of the news about Toyota’s Quality problems has prompted me to reflect upon the fundamentals of a lean business system.

At the beginning of my lean journey, I learned from Toyota about the cultural foundation upon which the House of the Toyota Production System was built. This cultural foundation is comprised of four principles and seven concepts. While in light of the recent issues, the concept of “Quality First” may be the most obvious place to focus, I gravitate to another of the key principles; “Problems are Treasures” and how it will be applied at Toyota and manufacturing companies worldwide as this crisis unfolds.

We don’t often think about problems as treasures. In fact, we typically view problems in a very negative context. Problems are often treated as something to be avoided, blamed on someone else, ignored, or hidden.

And yet, it is those very problems that provide a path way for future improvement.

The problems that we encounter in our daily operations are really opportunities for improvement – but only if we can accept them as gifts and stop sweeping them under the proverbial rug. It is when problems are ignored that they grow and multiply to something that negatively affects the customer—the ultimate sin.

We can translate those problems into improvement opportunities by embracing abnormality management The practice of abnormality management helps us to realize that a problem exists, understand the root cause and implement a solution. Most importantly, we must monitor the corrective action to determine if the solution was appropriate and continue making improvements until the problem—or opportunity— is permanently resolved. It sounds simple, and we hear it often, but only a few companies with a disciplined culture sustain results and continuously improve Defining a process to track problems and their corrective actions is critical for ensuring you take advantage of problems (or opportunities) when they arise. In daily operations, the SQDC (Safety, Quality, Delivery, and Cost) board in the process area along with a kaizen newspaper is our preferred method for identifying abnormalities, developing corrective actions, and tracking completion and sustainment. When these problems are larger in scope or become chronic, the A3 form is another helpful tool to ensure problem resolution. Regardless of the tool you choose always, always follow the Plan Do Check Act (PDCA) methodology.

While firefighting is a constant reality, it is less so in a strong lean culture. The complexity of our process or the chaotic conditions in which we operate may force us to prioritize the problems that warrant a permanent solution. However, we must make that choice and drive those most critical problems away. A mentor of mine once told me, “you may have to firefight ten fires each day, but if you don’t spend the time required to permanently extinquish at least one a day, tomorrow, they will become eleven, then twelve, and so on until you are buried.”

The crux of continuous improvement is realizing that these opportunities exist and driving them to a permanent solution.

Toyota’s recent quality issues have definitely impacted their customers and the results have been very painful for Toyota.

Toyota has arguably been the highest quality and most effective car producer for two decades. The other automotive companies have stumbled as well. It is going to be very interesting to see what changes result from Toyota’s most recent opportunities.

So what about your company? How are you going to capitalize on your treasures?

––––––––––––––––––––––––––––––––––

“

You may have to firefight ten fires

each day, but if you don’t spend the time required to permanently extinguish at least one a day, tomorrow, they will become eleven, then twelve, and so on until you are buried.

”

––––––––––––––––––––––––––––––––––

Managing Times | Q1.10 www.managingtimes.com

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MANAGING TIMES TBM LeanSigma® Institute 2010 Schedule Highlights Corporate Headquarters Durham, North Carolina 800.438.5535 Australia Melbourne, Victoria 061.400859193 Brazil São Paulo 55.11.5051.7490 China Pudong, Shanghai 86.21.6888.6671 France Lyon 33.472.91.32.88 Germany Heidelberg 49 (0) 6221.825.835 India Gurgaon 91.124.437.5995 Mexico Monterrey 52.81.50.00.91.36 Switzerland Geneva 41.22.710.77.70 United Kingdom Derby 44.1332.367378

Leveraging LeanSigma for Growth An interactive two-day workshop for senior manufacturing executives who wish to create a clear, concise and compelling vision and leadership roadmap for business transformation. This workshop focuses on using the powerful and proven tools of LeanSigma, the Kaizen Breakthrough methodology, and Value Innovation to create unique competitive advantages and a high-performance culture for exceptional growth in sales and earnings.

• August 5-6, 2010 in Durham, NC Go to www.tbmcg.com/llg for more information and additional workshop dates throughout the globe.

Giving Your Company the Edge through Effective Strategy Deployment Webcast with Gary Hourselt, Executive Vice President and CFO of TBM Consulting Group, Inc. and former CEO of Huck Fasteners.

Many companies implement change in their organizations including the use of a LeanSigma improvement approach but few sustain the benefits.

Many formulate excellent strategies but few execute them with intended results. Join an online presentation about business strategy, sustainable results and getting your organization to become a higher value-adding entity with a sustainable approach to effective execution. This concise overview will give you a unique take-away value to improve your company performance. You will also see real bottom-line benefits achieved by several Fortune 500 companies.

• April 20, 2010 – online from 2:00-3:00pm EST Register for the web event: http://www.chiefexecutive.net/media/TBMwebinar Lean Tool Kit A five-day workshop covering lean tools and how they can be strategically integrated to achieve improved operational results. This course also serves as the first class of the multi-week TBM Lean Certification.

• May 3-7, 2010 - Durham, NC • August 9-13, 2010 - Durham, NC • November 8-12, 2010 - Durham, NC Go to www.tbmcg.com/ltk for more information.

CEO Boot Camp An intimate, one-on-one opportunity for executives to meet and learn from leading CEO practitioners who aggressively leverage lean as a tool for market dominance. Spend three days meeting directly with CEOs from leading companies who have led their organizations through a lean transformation. Tour their facilities and take advantage of the opportunity to meet directly with CEOs, senior division and site leaders. Personally hosted by TBM CEO, Anand Sharma.

• June 21-23, 2010, touring Pella Corporation, Sealy Corporation and Vermeer Corporation.

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

LeanSigma Global Summit If you attended the Kaizen Promotion Office Exchange, the Lean Excellence Conference, or the Lean Leaders Exchange in past years, you won’t want to miss this event. We’ve combined all three events into a single, comprehensive summit for continuous improvement leaders and operations management teams who want to reenergize, refocus and reinvigorate their continuous improvement initiative. Benchmark, network, and learn from others who are effectively utilizing lean to drive sustainable results, generate growth, and improve bottom line performance.

• September 14-17, 2010 – Las Vegas, NV Go to www.tbmcg.com/lsgs for more information