Continuous Improvement with Operational Excellence
Create Standard Work for Flow Easily with Operational Excellence
Operational Excellence Systematic management of all the processes to achieve world class performance by:
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Efficient utilization of tools Optimization of Resources
Elimination of process waste / inefficiencies
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Lack of operational Excellence ‌
Results in low profitability and cash flow issues
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Operational Excellence Becomes a Concern when… Cash flow starts to get a little tight – – – –
Trouble meeting payroll Suppliers are screaming for payments Inventory is out of control Expenses are rising faster than revenue
Backlog starts to shrink Opportunities are missed due to cash flow issues 307.222.6083 opexsociety5@gmail.com
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Improving Profitability – Traditional Approach CFO/Department Head is responsible to lead the cost cutting efforts Focus usually is on cutting expenses
Workforce Reduction
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Scrutinize Purchasing
Extend Payment Terms
Reduce Employee Perks
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Performance Improvement: Strategic Approach
measure the current level of performance
identify waste
Generate Ideas to achieve a better level of output
Performance improvement is all about
organizational change 307.222.6083 opexsociety5@gmail.com
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Ideas Should be… • Effective • Efficient, and • Adhere to Market Forces
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How to Generate The Ideas
Value Stream Mapping
Visualize Your Processes
Value Stream Mapping is a Lean technique used to analyze the flow of materials and information currently required to bring a product or service to a consumer.
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Eliminate Waste
$ Increase Profits
Lean: A business system for organizing and managing product development, operations, suppliers, and customer relations to create precise customer value—goods and services with higher quality and fewer defects—with less human effort, less space, less capital, and less time than the traditional system of mass production.
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Purpose of Value Stream Mapping Identify processes where “Lean” techniques can be applied Help reduce / eliminate wait time Eliminate process waste Reduce production cycle and processing time Understand process linkages and dependencies Create the basis for “Lean” implementation plan
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Value Stream Mapping – Case Study 307.222.6083 opexsociety5@gmail.com
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Business Case Problem Statement
Solution
Losing Business to competitors due to long lead times and late deliveries.
Improve lead time performance by synchronizing production with customer demand. Key Requirements
Ideal State
1.
• On-Demand
2.
• Defect Free • 1-By-1 • Lowest Cost
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Reduce flow time to meet customer demand. Reduce RAW, WIP and FGI levels.
Measurements 1. 2. 3.
Total flow time Inventory levels EBIT performance.
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Value Stream Map – Current Process
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Team Brain Storming Session • Can Customer increase the size of the blanket order and provide us with a longer term forecast visibility? • Can we flow the demand down to the supplier with a longer term visibility? • How can we reduce wait time? • How can we reduce change over time? • Can we reduce lot size? • Can we merge production processes to reduce travel time? 307.222.6083 opexsociety5@gmail.com
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Value Stream Map- Future Process
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Strategy Implementation Check List
• People Plan
Do
• Product • Systems Act
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Check
• Processes
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Next Step • How would you apply Value Stream Mapping into your Business? 1. 2. 3. 4. 5.
6. 7. 8. 307.222.6083 opexsociety5@gmail.com
Share the business challenge with your key staff. Define business case Define a high level business process Define activities for each business process including wait time. Randomly pick a minimum of 5 current jobs and record all activities and time. From the initial customer call to receipt of payment for the goods or services. Map the process – this is your current value stream map Categorize each activity as value added or non value added Define a map eliminating as many of the non value added activities – now you have a first draft of the future state www.opexsociety.org
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Next Step
Strategic Pricing
Identify Initiative • Does your product offer exceptional Buyer utility? • Use Buyer Utility Map
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• Set the price which is easily accessible to mass of buyers • Use Pricing Corridor Tool
Align Operations • Set Target Profit • Come up with Target Cost • Streamline Cost Innovation
Adoption • Create a consensus • Address adoption hurdles in actualizing the strategy • Balance Scorecard
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