M A N AG I N G T I M E SA u g u s t . 0 6

PUBLISHER’SNOTE

CASE STUDY STRATEGIC VISIONING

TECH TALK2 8 10

Using LeanSigma® To Make Molehills Out of Mountains

Bunge Argentina

ducation is one of the most critical steps inempowering your people to engage in the kind ofcontinuous improvement and creativity that canenable the enterprise to grow. Education comes inmany forms, and providing education to someonedoesn’t necessarily mean sending them to a universityor trade school. Manufacturing companies, like otherorganizations, must encourage their best resources—their people—to continue to learn and grow. And ona continuing basis, all of us face the critical issue offinding and keeping qualified and motivatedemployees. One very effective antidote to this issue ispersonal mentoring.

Mentoring provides a number of advantages. Amentor, typically in upper management, can findbetter access to the “employee state of mind” downdeep within the organization when involved in amentoring relationship. Mentoring can also helpmanagers identify leaders and doers—the very peoplewho may well become the next-generation leadershipin the organization. This is especially critical forcompanies that need to consider succession planningand don’t want the legacy of the lean transformationto fall by the wayside with a change at the top.

Mentoring is also a form of team-building. Justas with kaizen teams who understand that the groupis “in it together” to find a solution to a problem,mentors and protégés develop a sense of togethernessthat can spread to other workers who benefit fromthe relationship through shared knowledge.Mentoring promotes trust and respect, which are thefirst steps toward understanding and acceptance—steps that lead to the ability to bridge divides andfacilitate problem solving using the intimacy of thementoring relationship to overcome obstacles.

Mentoring can also be a way for someone whohas been successful within a company to give some-thing back—a bridge from the top to the bottom orany level in between that can aid in growing thecompany and ensuring the longevity of its successfulculture or proprietary road map for success.

If a company encourages mentoring and views itas a long-term program, then success will likely fol-low. Once employees see that an organization caresabout them and their needs, many will actively per-petuate the cycle—and that can create the fabric fora highly loyal, united, and competitive workforce.

Mentoring goes hand-in-hand with good leanleadership. Lean leadership requires a commitmentfrom top management to not only have a plan for alean transformation, but also to drive that plan byempowering employees to learn, think, and act creatively. In this issue, we see how one processagribusiness, Bunge, has found LeanSigma® to be theideal means for melding corporate concerns (quality,productivity, safety, and efficiency) with its corporateideals (maintaining a flexible and efficient organiza-tion with a focus on integrity, the customer and thefarmer, teamwork, an entrepreneurial mindset, andopenness and trust) (p. 2). Being a lean leader isaddressed in a report from the 2006 Lean LeadersExchange (p. 6), and the theme of lean leadership iscarried further with an article on the importance ofpolicy deployment (p. 9), as well as an article onmanagement’s responsibility for recognizing whenabnormalities become “normal” and changing thec u l t u re to re c o g n i ze and remediate abnormalities (p. 10).

Underlying all of these issues is education,because it is the foundation for creating successfulleaders—at all levels of an organization. Encouragementoring in your organization, and you willencourage new leaders, all to your benefit.

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

E

PUBLISHER’SNOTE Education Is Empowerment

LEANCOMMUNITYNEWS

1

ndy Horbachchevsky, formerly KPO manager at Steinway in NewYork, has been promoted to general manager. … Dan Klassen, formerly withthe Global LeanSigma Office at EDS, has joined Pella Corporation’s humanresources team. … Claudia Hall, regional manager for the Contract Divisionat Sealy, was named KPO for the corporate business process initiative. …Mark Phillips has joined the Kaizen Promotion Office at Vanguard Furniture.He was formerly an upholsterer at Vanguard. TBM welcomes several newconsultants to TBM team. Dom Sawchuck and Harold Tessman will bebased in the U.S. Moisés Garcia, Francisco Javier Ayala, and Jose LuisGarcia Hernandez will join TBM’s Mexico team. TBM also welcomes BethAnn Hunt and Michael Zsitnyar to its Durham office. Beth Ann andMichael will be working in TBM Institute sales.

A

MANAGINGTIMESA publication of

TBM Consulting Group 800.438.5535, www.tbmcg.com

PublisherAnand Sharmaa s h a r m a @ t b m c g . c o m

Executive EditorWilliam A. Schwartzbschwartz@tbmcg.com

Managing Editor Julie Poudrierjpoudrier@tbmcg.com

Featured Columnists Mike Caldwell Bill SchwartzCharlyn Daugherty Sam StevensonGary Hourselt Noel TempleMarco Nascimento

Contributors Stacy Aponte-Morris Bob O’BriantOlga Bouche Gary RascoeSteve Hahn Bill SampleBob McElroy Ron WinceMike Noonan

Art Direction and DesignIONA designinfo@ionadesign.com

Printing Carter Printing & Graphics, Inc.www.carterprintingnc.com

Published bi-monthly in Durham, NC 4400 Ben Franklin BoulevardDurham, NC 27704

TBM Consulting Group, Inc. is the sole licensee ofLeanSigma®, a registered service mark of MaytagCorporation

If you would like to receive this journal via email,send your vital information including email addressto tbm@tbmcg.com

On the cover: When there is a high demand for aproduct, and a process runs around the clock nearlyevery day of the year, concerns about quality,productivity, safety, and efficiency loom large. BungeArgentina is using LeanSigma® to address those concerns while staying true to the corporate goals ofmaintaining a flexible and efficient organization witha focus on integrity, both the customer and farmer,teamwork, an entrepreneurial mindset, and opennessand trust.

2

P

CASESTUDY

icture mountains of soybeans dwarfing thepeople and heavy equipment used to move them—hills of beans like so many large, rounded grains ofsand waiting to be moved from ship to plant. It’s astaggering sight to see so much of one grain in oneplace, and this is what greets the visitor at the portoperations of Bunge Argentina’s Puerto General SanMartín Industrial Complex, located on the Paranáriver coast. Here the mountains of soybeans arecrushed into meal and crude vegetable oil and thenexported throughout the world. The port facilityhandles other grains, such as corn and wheat, alsofor export purposes, but soybeans account for thebulk of the processing.

Bunge was founded in 1818 and has growninto an agribusiness and food company with over22,000 employees in more than 450 facilities in 32countries around the world. In 1884, Ernest Bunge,grandson of Bunge’s founder, moved to Argentina totake advantage of the growing grain trade market.

Since that time Bunge focused on a number ofbusinesses, and today the company includes fertilizer,agricultural, and food products with operationsaround the world. Bunge has expanded its Argen-tine operations via organic growth and acquisition.

By 2010, South America is expected to produce127 million tons of soybeans—more than the rest ofthe world combined. As South America’s leadingoriginator and processor of soybeans, Bunge’sindustrial facilities will handle much of the process-ing of that grain.

Back in Puerto San Martín, the crushing plantprocesses nearly 8,000 tons of soybeans every day.Additionally, the two berths at the complex’s portfacilities have a 3,000 ton-per-hour loading capacity.This is a high-volume processing plant that operatesaround the clock.

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

Carlos Nowik, plant manager of the complex,joined Bunge in early 2005, and his first day on thejob coincided with the first day of the plant’s firstkaizen events. Fortunately for Nowik, he had beenexposed to lean principles in his previous job and sowasn’t completely overwhelmed with the pace andactivity associated with the week-long kaizen whiletrying to learn a new job.

Nowik says, “I was with Unilever in Argentinaas production manager and distribution manager ina soap plant. For that reason I was very familiar withcontinuous process improvements. Unilever hadbeen running a TPM program for some time underthe Japanese Institute of Plant Maintenance. So Iwas pretty familiar with 5S, autonomous mainte-nance, and things like that. Of course the industrywas absolutely different, but I was very happy tostart my new job doing things that I already knew.”

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

These first two events, which were in additionto several other events held at a number of Bungesites, were a phenomenal success. The crushing plantmet all its goals, and the port increased loading ratesby 10 percent and met the safety goals. From the sixevents that were held at various sites over a three-week period, Bunge realized $2.5 million inpotential savings and additional margin.

Bunge Argentina: Preparing for the Future with LeanSigma®

By Ma rco Antonio Na s c i m e n t o, TBM Senior Management Consultant

3

A subsequent kaizen event had a goal of reducing time to restart a line after a shutdown.According to Ariel Lascano, the production managerwho is responsible for the crushing lines, amongother things, restarting a line after a long-term shutdown (such as for maintenance) or a power outage was very time consuming. The kaizen eventsought to find ways to reduce the time needed torestart a line. The results were extraordinary, butmore important according to Lascano was that theimprovements were made by the operators, “by us.”Lascano adds, “These new methodologies haveremoved our former daily way of working and allowus to increase our work goals [by] searching for newand better standards [of work].”

The dramatic results that can be attained usingkaizen have been well documented, but how does alean transformation really affect a company? Nowiknotes that LeanSigma is beneficial because it is morefocused and gets results more quickly and effectively.Enrique Humanes, chief operation officer, adds tothat: “The vision you have working with a team ismuch broader than when working alone.” And that’sthe essence of a lean transformation—teamwork andcreativity. “It’s really very creative,” continuesHumanes. “I’ve found that the people involved arespectacular…because they want to be part of thegroup and create value.”

Loscano adds, “All the people … know theadvantages and benefits of working with a lean pro-duction system, and all of us try to eliminate thosethings that don’t add any value to our daily efforts.”

The creativity engendered by a kaizen event isevident. Consider that for those initial events atPuerto San Martín participants had 107 improve-ment ideas for the crushing operation and 78 for theport. People’s willingness to make suggestions andthen act on them is a “good example of Bunge’svalues—commitment, entrepreneurship, and innovation,” says Humanes.

However, enthusiasm alone does not guaranteethe success of a lean transformation. Nowik highlights that commitment is the key, and thatcommitment starts with management. “What Ilearned at Unilever is that this kind of process goesfrom top to bottom and it absolutely has to have thegreat commitment of the top management to support the process. Management has to provide theresources and has to be convinced about the benefitsin both the short and long term. Very often thiskind of process will fail if the top management ortop directors are not convinced about it. When people see the commitment, everything will gobetter.” Lascano agrees, “The support provided by

the management has been crucial. This, added to thepositive results, has promoted even more the man-agers’ involvement.” In fact, at a roll-out of lean atanother factory in Argentina all of management wasthere for the kick off—a great show of commitment.

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

4

CASESTUDY

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

When it comes to cultural transformation,Nowik points out that it’s not how long a person hasbeen employed at a plant that will determine acceptance, but rather how open-minded the personis. “Fortunately we have many people convincedabout the value of kaizen,” says Nowik. Lascanoechoes that sentiment: “Currently, we all commenton kaizen not only as a strong tool to solve problemsand to improve our work but also as a culturalchange, as a different way of carrying out our tasks.”“We have more commitment right now in middlemanagement and in the operators themselves on theshop floor,” continues Nowik. “They are moving forward with kaizen, following the results, trackingthe action plans, and so on.” Lascano notes that thishas led to several positive changes: stronger teamwork, respect for others’ ideas, better interactionamong the different areas of the complex, bettercommunication, and an every-day commitment todoing things better.

Nowik points out that the process shouldinvolve everybody—the kaizen promotion officer(KPO) shouldn’t be single-handedly creating change,but should only be facilitating it. Lascano adds thatthe internal communication that the various areasmaintain with the KPO to plan the new events,improve the visual contact and indicators, and apply5S has been instrumental in the success of the plant’slean journey.

At Bunge, good early results and corporategoals that promote entrepreneurship and innovationwent a long way toward convincing people of thevalue of LeanSigma. But it’s not all been easy.

“Our main challenge for this year is to workwith the line supervisors,” says Nowik. “I havechallenged myself to give [the supervisors] moretools and convince them to take a more active role.They are very absorbed by the routine and doingtheir job day-to-day and are not so convinced [aboutthe value of the changes brought about by a leantransformation].

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

According to Nowik, this is where Juan Lorido,the plant’s KPO, has been quite effective. Lorido is aformer supervisor, so he knows the people on theshop floor very well and they know him, which is anadvantage when he forms the teams for kaizenevents. He also knows the other supervisors well, andthis has helped him in working with them. His 20years of service in the plant means he has the experi-ence and knowledge that provides the credibility andinfluence needed to be successful as a facilitator andleader. As is critical for any KPO, Lorido has greatpeople skills and communicates well with colleagues,shop floor workers, and managers. A successful KPOcan be instrumental to acceptance of the lean trans-formation by the operators and supervisors on theshop floor.

5

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

As Bunge looks ahead to the future, it is building on its early successes and counting on itspeople to drive continued improvement and innovation. Nowik notes that when people visit thefactory—which is old and was acquired by Bungejust four years ago—they comment that it looks better and that they see something different goingon. These visitors then go out and spread the wordto other organizations, which in turn leads to morerequests for plant visits. “Outside recognition of theimprovements helps us to have the commitment togo forward and get more results and more impor-tantly to sustain the process, which is the main challenge,” he says. Humanes adds, “[Bunge's leantransformation is making] the heart of the organiza-tion, our people, well prepared to face very hardchallenges in the near future.”

For the future, Humanes would like to see thewhole organization, from operations to trading,adopt continuous improvement as a way of life,eliminating waste in any activity Bunge may undertake. Lascano would like to see suppliersinvolved with kaizen events to lean the value chain,an increasing emphasis on 5S and TPM, and theinclusion of all of Bunge Argentina’s plants in theLeanSigma transformation. With the evident strongsupport and commitment from both managementand employees, it’s likely that Bunge will have noproblem surmounting any mountains in its path.

6

The next critical step is to communicate thisvision throughout the company. A lean leader willhave the communication skills to engage senior management, middle managers, and shop floor asso-ciates. Good leaders will continuously communicatethe vision and objectives of the lean transformation.They will also “walk the walk,” which means leadingby deeds, not just by words.

Corporate policy deployment can help with com-municating the vision. Senior management developspolicy deployment, which will show its commitmentto the lean transformation. By codifying the goals fora particular period of time, and the game plan forreaching those goals, a policy deployment plan canbe the foundation upon which the lean transforma-tion is built. At a lower level, the policy deploymentplan is the basis for creating a road map of strategicprojects to be undertaken.

One key component of engagement is training.Giving people the knowledge and skills they need tosupport a lean transformation is a basic means ofhelping to ensure their involvement. Once you givepeople the skills, then you can reasonably set expec-tations for their involvement. Establish metrics andexpect people to not only track them, but also reactto them when abnormalities exist. Training themanagement team to manage for daily improvementis vital to a successful lean journey.

Another critical choice is how to staff the kaizenpromotion office (KPO). Be sure to pick the rightpeople for this important facilitation function andprovide them with the resources and tools they willneed. A strong KPO can make the differencebetween success and failure of the lean transforma-tion. The members of the KPO will need yourrelentless, consistent support, and that means helping to make sure that the scope and objectives ofeach project are appropriate, assuming a sponsorshiprole, supporting events and teams in addition to theKPO, and celebrating and rewarding successes.

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

BM’s Second Annual Lean Leaders Exchangewas held this summer outside of Winston-Salem,North Carolina. The Lean Leaders Exchange wasdeveloped as a leadership immersion opportunity togive seasoned lean practitioners an opportunity totake their lean initiative to the next level by provid-ing leadership learning and development to supportthe lean transformation, as well as networking opportunities. One of the features of the meetingwas the single-theme-focused roundtable discussionsthat took place on Friday. These discussions covered several topics, one of which was lean leadership—acrucial component of any successful lean transformation. Here we share some of the insightsfrom the lean leadership roundtable participants.

Lean leadership requires that the lean initiative bedriven from the top and that the entire managementteam is on board. Great lean leaders share certaincharacteristics that contribute to their success and tothe success of the lean transformation. These characteristics include knowledge, credibility, vision,and passion.

But those characteristics alone do not ensuresuccess. Lean leaders must be supported by seniormanagement, including the CEO. Lean leadershipshould also be supported by a policy deploymenteffort at the corporate level—policy deployment isthe means by which the company will set the goalsand direction of the organization in their lean jour-ney. Other critical issues that can positively affect thelean transformation are the appropriate selection of successful events, support from administration andfinancial areas as well as the shop floor, and the availability of resources.

Pitfalls exist too, and a lean leader cannot be successful if all of senior and middle management arenot committed to the lean transformation. Otherpitfalls include lack of knowledge of lean among senior managers, weak involvement by senior management, the attitude that lean is limited only tooperations, too great a focus on savings rather thanon developing capacity for growth, a lack of owner-ship of the lean transformation by middle manage-ment, no sense of urgency, and a lack of resources.

So what does it take to be a successful leanleader? First, a corporate vision must be developed.This vision will create a sense of urgency and address competition and how that relates to the survival of the company. This vision should alsoinclude a growth strategy—using lean to growmarket share and increase revenues—and even consider how lean can be applied to make potentialacquisitions successful.

T

LEADERSHIP Lean Leadership: Paving the Way for SuccessBy Charlyn Da u g h e rt y, Exe c u t i ve Lean Ad v i s o r, and Bill Schwartz, Exe c u t i ve Vice President

Don't tell people how to do things, tell them whatto do and let them surpriseyou with their results.

~ George S. Patton

7

Characteristics Sh a red by Lean Leaders

• Open minded/open to change• Good listener• Enthusiastic, passionate• Good communicator• Change agent• In vo l ve d• R i s k - t a k e r• Understands the numbers• Consistent, re l e n t l e s s• Strategic thinker• Sense of humor• A s s e rt i ve• Mo t i va t e d• High energy• Et h i c a l• Tru s t w o rt h y• Values people• C o m f o rtable dealing with people at all leve l s• Pa t i e n t• K n owledgeable about the pro c e s s

Accountability is another strong factor in a leanleader’s success. You are responsible for not just setting metrics but also performing audits or assess-ments to review those metrics and solve problems.Keeping a bunch of statistics is not helpful if thosestatistics are never reviewed or acted on.

As the lean journey continues, you will need toconstantly revisit your vision, update your roadmaps, and expand participation. Remember that success does breed success, and success will encourage more people to join in—but only if theyare made aware of those successes. Never stop communicating. Don’t forget to provide incentives.Reward success. Share your results, good and bad.

We all know that a lean journey is not without itsstumbling blocks. As a lean leader you must antici-pate problems and actively work to remove barriers.Be willing to make the difficult decisions, includingremoving people who refuse to get on board. At thesame time promote and reward your “lean movers.”

Don’t fall into the trap of competing priorities.This includes both constant shifting of priorities aswell as piling on too many projects to enable keyones to be completed in a timely fashion. Stay thecourse, using the policy deployment document andyour vision and road map as your guides. Rotate people into KPO positions as a means of preventingburnout and creating new leaders. Make sure thatthe CEO and senior management renew their commitment to lean and that the commitment iscommunicated to all staff. Use your resources torenew excitement and keep the “wow!” factor at thehighest level.

Being a lean leader also means planning for thefuture. If you work to embed lean throughout the corporate culture, the loss of one big lean advocatewon’t mean the demise of the lean process. Have asuccession plan. Push decision-making down to thepeople at the first level. Empowering individuals isone of the surest ways to make the lean culture per-manent at your plant. Stress creativity before capital.Establishing a “no blame” culture will encouragepeople to actively participate, make creative sugges-tions, and step up to the problem-solving plate.

Lean leadership is a tough but rewarding job. Noone is going to be perfect at all aspects of that job,but if you remain open-minded, enthusiastic, andcommitted, and you’re willing to keep learning, youcan be the kind of leader who can drive the successof your company’s lean journey.

New leaders are waiting to surface in every organization.Talent is struggling for air. Inventive impulses await your command. I believe it is a leader’s responsibility torelease this energy, to sate this thirst, to create “human communities” that promote trust and respect and challengepeople to achieve great things and honor their achieve-ments. In return, such leaders enjoy a true wealth thatmoney cannot buy.

~Anand Sharma

The strongest principle ofgrowth lies in human choice.

~ George Eliot

while ago, Don Fites, former CEO ofCaterpillar, Inc., said that one of the most difficultchallenges facing manufacturing executives is distributor relationships. Today, that may be anunderstatement, even if for different reasons.

If your company manufactures a product that itdoesn’t sell directly to the people who use it, thenyou have independent dealers, distributors, retailers,catalog houses, manufacturing representatives, or acombination of those doing the selling for you. Youprobably consider these operations as your customers—most likely your primary, most impor-tant customers. They are the volume buyers. Thebetter they perform, the more you sell. They grow,you grow. Or do you? You may or may not find yourtop line growing, but in any case your bottom line is getting squeezed and your prices are under increasing pressure. We see it too often. Today, withcompetitors everywhere on the planet, these primarycustomers of yours are going price hunting. You areat their mercy. They are keeping their margins atyour expense. They won’t stop as long as there is acompetitor of yours out there who has a substituteproduct with a better price. You may think you’resafe if you have exclusive arrangements with them.Don’t be fooled. This price hunting will often be disguised as increasing warranty claims, demands foradditional product features for too little or noincrease in price, or simply constant demands forlower prices in order for them to compete.

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

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

Step one: Start thinking of your dealers, distributors,retailers, catalogue houses, or manufacturing representatives as distribution channel partners ratherthan customers. They must partner with you tobring the highest value to your real customers: thosewho use your products. You and your distributionchannel partners can both win, but not at eachother’s expense and certainly not without addingtrue and high value for the real customers.

Step two: Take an inventory of what these distribu-tion channel partners actually do. Don’t be satisfiedwith general descriptions like “build relationshipswith customers” or “reach customers you cannot.”List specifically what they do—the actions they takeand the processes they use to build these relation-ships, reach these customers, and so on.

8

Gary Hourselt

A

STRATEGICVISION

Step three: Go listen to the “voice of the realcustomer.” Organize cross-functional teams of peoplein your own organization to work diligently andconsistently to find out which product features andservices (key point) those who use your productsvalue and which they do not. Go visit them. Askthem general, open questions about what makesthem more or less successful; what makes them moreor less profitable; what makes them more or lesshappy; what keeps them awake at night. Observethem. Above all, listen to them. Call them on thetelephone. Read their web sites. Make a list of themost significant factors of competition you uncoverand identify which are highly valued and which havelow value for your real customers. Create real intimacy with those who use your products.

Step four: Go back to the specific inventory of whatyour distribution channel partners actually do today.Armed with your voice of the real customer data,decide which of the actions and processes that thedistribution channel partners do are of high value tothe real customer and which are not. If there are anyactivities and processes being performed that are ofhigh value for the real customer, decide then howmuch the customer should be willing to pay for eachof those value-added actions and processes. Here’sthe real test: Would the customer be willing to payfor them at all?

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

Step six: Reduce or eliminate the activities andprocesses that your distribution channel partnersactually do today that are of little or no value to yourreal customers or to your organization. At the sametime, find ways to elevate the things, if any, that yourdistribution channel partners actually do today thatare of high value to your real customers.

Step seven: Together with your most interested distribution channel partner, create product and serv-ice bundles that are of high value to your real customersbased on what you have learned from them.Coordinate roles based on the strengths of your organi-zation and the strengths of your most interested distri-bution channel partner. Above all, do expect your customers to pay for high-value product and servicesolutions, and do not pay your distribution channelpartners for anything that does not provide valueand certainly do not ask your customers to do so.

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

Strategic Distribution Channels: A Partnership to Deliver Va l u eBy Ga ry Hourselt, Vice President, TBM In t e rnational and St ra t e gy Pra c t i c e

9

s there a connection between successfulorganizations and their method of communicatingthe strategic direction of the business?

In our interactions with workers and the managers who guide them, the goal is always to helpprovide them with whatever it takes to maximizetheir effectiveness and productivity. Sometimes thismeans that we become a communications linkbetween the goals of the organization and the activityon the shop floor.

It is sometimes amazing to me the disconnectsthat exist at all levels of an organization. How can abusiness ever dream of being successful, when thedirection it wishes to go is unclear to all?

Employees are the not-so-hidden, but so-often-overlooked, best resource a company has. You canbuild the finest facility and equip it with the mostup-to-date technologies, but if you put in place aworkforce that is untrained, disjointed, and disillusioned, you have nothing. It is imperative thatwherever we go, there must be an assertive, veryvisible process in place to include employees in aconcerted work process and product flow.

This concerted effort of inclusion starts with policy deployment from top management. Policydeployment means identifying and qualifying specialgoals for the organization for the coming year. Eachlevel and each unit of the organization shares in therealization of the means to achieve these overallobjectives in a timely, doable way. Once the company’s policy deployment goals have been com-municated throughout the entire organization, eachunit within the organization develops its own plan of how that unit will operate to help achieve thegoals. You can’t expect the workers on the shop floorto help meet company goals if they aren’t aware ofthose goals and the role they play in helping to attain them. If you tell them what the goals are, thenthey can use their creativity and ingenuity—alreadyin bloom thanks to the organization’s lean efforts—to work together for the company’s profitability and growth.

C u l t u re Change: The Role of Policy DeploymentBy Mike Ca l d well, Senior Management Consultant

FUTURES

I

There is great wisdom in the belief that “Peoplesupport what they help to create.” In a carefully andpurposefully crafted environment, this is not onlypossible, but very doable and very attainable. It alsotakes a great deal of trust.

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

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

Communicating those goals to everyone in theorganization and then helping everyone to understand how they can help push the culturechange. This is employee empowerment, and therewards are many, from the sense of satisfaction andparticipation the employees feel to profitability forthe company.

The bottom line is that policy deployment willhelp establish and maintain organizational culturechange.

Mike Caldwell

operator find another defective part and end up taking precious time out of her day to sort throughand find good parts. I look at the hour-by-hourchart and see that targets have never been met. (Thehour-by-hour chart must be updated hourly,detailing the abnormalities along with time lost.Standard work must be in place to define the initialized normal point.) Almost every hour wasshort of the target by at least ten components.

I ask the management team how they meet theircustomer demand and am told they work a lot ofovertime and add people to the process when theycan. My concern now is not so much with the operator, but with the management team’s completelack of a sense of urgency.

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

The operator wasn’t at fault—she was doing thebest she could to produce only good product, butthe potential for excessive waste is huge, especially ifdefective product gets mixed with the good product.Not only is time being wasted, but what happens ifone or, worse, more than one defective product isreceived by the customer?

Management must be able to recognize an abnor-mality for what it is and respond in a timely manner.The supervisor, once notified of the problem, shouldimmediately assign someone to sort through theparts to ensure the operator receives only good partsto perform her job. Making the operator sortthrough her own material adds non-value-addedtime to her process. Operators are paid to makeproduct; if they’re not making product the companyis not making money. Having one person, such asthe water spider or team leader, sort parts would bemore cost-effective than requiring overtime oradding people to the operation. Adding people simply results in more people performing the same non-value-added activity. Having the right parts atthe right time for the operator is also more cost-effective than having the operator look for goodparts or rework defective material.

Once someone is sorting through the material,the impact of the defective parts on the business canbe measured and documented. This gives you somepower over the supplier to prove the numbers, aswell as creating expectations as to how and what thesupplier should be doing to correct the problem.This will also give the management team some senseof how big the problem is, as well as the real impacton the business.

bnormality management is a topic we needto be more in tune with if we are to become bettermanagers. Webster’s New World Dictionary defines“abnormality” as an abnormal thing or event or thequality or condition of being abnormal. Abnormal isdefined as not average, not typical, and not usual. Anabnormality is also any deviation from standardoperations.

A good part of our days as managers is spent battling such things as not having material, havingthe wrong material, or having defective material, notto mention not having enough people to do the jobor having to wait for decisions to be made by peoplein the quality or engineering departments. This isonly a small part of the firefighting we do—and yetfirefighting, dealing with the “normality” of abnor-mality, takes away time that could be used to trainoperators, perform continuous improvement activi-ties, and meet daily customer demand. Firefightingseems to have become a normal part of our lives, anaccepted practice, when in fact it should be consid-ered an abnormality. Anything that prevents an oper-ator from doing his or her job the way it was meantto be performed is an abnormality, includingmachine breakdowns and process breakdowns. Anoutsider can easily see the abnormal, but for those ofus who deal with the day-to-day supervision of run-ning the business, the abnormal becomes the normal.

We have visited numerous firms that seem toview firefighting as a part of life in the world ofmanufacturing. How many times have you watchedan operator struggle with defective parts from a supplier, either internal or external? How many timeshave you watched operators leave their work stationsto get the right parts from the store room? Howmany times have you had to scrap a batch of parts?How many times do schedules change mid-cycle?Think about these things as you read through thefollowing example, but don’t feel like you’re alone—we see this in most of the firms we visit.

While touring a widget facility with the supervi-sors and management team, I notice an operatorstruggling to assemble her widgets. After several minutes she realizes one of the components is defective, sets the part aside, and retrieves anotherpart to complete the operation. What surprises me isthat not one of the managers or supervisors takes anyaction to assist the operator. One of the supervisorsstates that this happens all the time and they haveinformed their supplier of the problem. When askedhow long this has been a problem, no one had agood answer. Most surprising of all was that no oneon the management team really understood how bigan impact this abnormality is having on the business. I become even more concerned as we watch the

A

10

TECHTALK Abnormality Management and ResponseBy Sam St e venson and Noel Temple, Senior Management Consultants

11

Steps to Ab n o rmality Ma n a g e m e n t

• To establish the urgency of timely response to a b n o r m a l i t y, the person in the corner office must be invo l ved in the process from the beginning, emphasizing the need to manage abnormal conditions as they arise.

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

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

• When a violation occurs, the cell leader re s p o n s i b l emust make the call (confront the violation)—and must do so in a constru c t i ve manner so as to not alienate associates, but to constru c t i vely work with them to re s o l ve the violation.

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

• Senior staff must frequently visit the shop floor to i n s u re the lean principles are being sustained. T h e yshould ask questions re g a rding the hourly p e rformance and offer assistance.

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

• Consistency of confrontation is imperative to managing abnormalities, and all levels of management must be invo l ve d .

This is just one aspect of the abnormality management process. We still need to make our factories visual and organized. We need to improvemaintenance activities through total productivemaintenance to create an autonomous workenvironment. We need to become real problemsolvers and real managers of abnormality.

To do a better job at responding to abnormality,we need to have a response system in place thatallows operators to signal when there is an abnormality, which requires an immediate response.A number of systems exist to allow operators to alertresponders to an abnormality.

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

Using an andon or other notification systemrequires responders with specific roles and responsibilities. First responders, such as the waterspider, team leader, or supervisor, should take someimmediate action to deal with the abnormality. Fromthere a decision should be made as to whether another level of response is required, such as fromengineering, maintenance, quality, or material.

Once the problem and its point of cause havebeen identified and temporary corrective actionshave been implemented, the root cause of the problem must be identified. Once the root cause isdetermined, countermeasures to prevent the problemfrom reoccurring need to be instated, with follow-up to ensure the right things were done for the right reasons.

Most of what has been mentioned here is only asmall sample of abnormality dealt with bysupervisors on a daily basis. So, how do we becomereal managers of abnormality? First we need tochange how we see our business and understand thatwhat appears to be normal may in fact be abnormal.Second we need to know the seven major wastes ofmanufacturing: defects, overproduction, inventory,motion, processing, transportation, and waiting.Each of these is an abnormality. Then we must putin place the appropriate actions to resolve abnormali-ties as they happen.(See the sidebar for a list of activities needed to become successful abnormalitymanagers.)

As we transform our companies we must exercisegood judgment in a consistent manner to drive thecultural behavior in a positive direction and determine our future business longevity. Part of thatgood judgment means recognizing and remedyingabnormalities. By having measures in place to dealwith abnormalities as they happen—empoweringassociates to act instantly, even to the point of stopping a line, you place value on their judgment,which in turn engenders a sense of responsibility thatultimately will help insure that your processes are thebest they can be. That, of course, means greater profit for the company, as well as a better positionfrom which to deal with global competition.

FIELDNOTES

12

Standard Work Observations

ustaining the results from each kaizen eventis a challenge for every organization. One of thetools to help an organization sustain improvementsis the standard work observation. Basically, supervi-sors set aside 15 minutes per day to observe one oftheir team members performing to standard work.The supervisor then documents the observations ona “Standard Work Observation Form.” The goal is toobserve every team member in rotation over a shorttime period. Many waste issues and improvementscan be identified, as well as potential problems withthe previous event. Solutions can then be brain-stormed and implemented, thereby increasing thechance for the results from a previous event to besustained. Several hints:

• Schedule the observation for the same time each day. Doing the observations right after a break orafter lunch works well because it serves two purposes—the observation gets done, and the operators get used to the supervisor being at a random work station when the employees aresupposed to be there.

• Always time the tasks during the observation, even if the complete standard work sequence willnot be completed during the 15-minute observation period.

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

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

— Bob O’Briant

S

Kaizen and Production Preparation Pay

hen the company that had traditionally pro-duced the carpets for all of the vehicles in Nissan’sX61B program, which includes the Pathfinder,Xterra, and Frontier truck, ran into financial difficul-ties, Nissan awarded part of that business—the manufacture of carpet for the Xterra and Frontier—to Lear. The original company used a “foam inplace” method to produce the carpet for the Nissanvehicles. This method involves injecting liquid foambetween a heated piece of carpet and a three-dimensional mold in the shape of the vehicle floor.We planned to use a different method of forming thecarpets and needed to get the manufacture up andrunning quickly, efficiently, and for minimal cost.Lear is an important customer for us, and thisNissan contract accounts for nearly $2 million of oursales, so we wanted to make sure the transition wentsmoothly. Normally the process of adding the capacity to produce vehicle carpets—from tooling to launch—would take from 18 to 24 months. Inthis case, Lear worked jointly with us to develop an alternative to the foam in place process, an acousti-cal/thermal insulator manufacture of recycled textile fibers.

Working with Lear, and using the LeanSigma®

methodology of production preparation (2P), wewere able to launch this program in about sixmonths. The objective of the 2P event was to achievethe best arrangement within a work area for theNissan X61B molded floor with the minimum people, machines, methods, and materials; improveproductivity and quality; and eliminate waste.

W

13

Prior to the 2P event, we had already usedkaizen events to create extra capacity in certain man-ufacturing cells. Kaizen also allowed us to consoli-date into a single cell programs that were originallyproduced in program-specific cells. We also performed a set-up reduction kaizen to cut the timeneeded to change out tools. Post-kaizen, set ups thathad taken two hours took just 30 minutes to com-plete, again enabling us to create extra capacity.

During the 2P event, we discussed and evaluat-ed automation alternatives, as well as labor costs forseveral different production scenarios. We also con-sidered a number of different ideas for heating andcooling the molds.

We determined that we could use existingequipment that had been freed up by kaizen eventsat another plant, thereby avoiding any capital expen-ditures. We conducted point kaizens on two othercells in the plant to free up two operators for work inthe new Nissan cell. Currently, we are producing 60parts per hour using two operators in the new cell.By using kaizen and 2P, we were able to meet Lear’sneeds in record time and at no additional cost to us.

— Roy Heeralall, CI Manager,Janesville-Sackner Group

Quest for the Perfect EngineT M

Sept. 27-28 St u t t g a rt, Ge r m a n yOct. 2-3 U KOct. 17-18 Br a z i lNov. 1-2 Mi a m iDec. 5-8 Sh a n g h a iDec. 12-14 Tu c s o n

Lean Management Accounting

Nov. 28-29 Du r h a m

L e a n S i g m a® Fundamentals

Oct. 24-25 Me x i c o

Design for LeanSigma New Products and Processes

Dec. 11-15 Du r h a m

Kaizen Bre a k t h rough Experience

Oct. 16-20 Yale La Fonte – Sao Paulo, Br a z i lNov. 6-10 MidContinent En g i n e e r i n g - Minneapolis, MN Nov. 6-10 WIKA Alexander Wiegand GmbH & Co. KG

Klingenberg, Ge r m a n y

Shop Floor Kaizen Bre a k t h rough Instructor Training

Nov. 6-10 Du r h a mNov. 6-10 De r by, UKNov. 12-15 Du r h a m

Kaizen Promotion Office Workshop

Oct. 2-4 Br a z i lOct. 31-Nov. 3 Du r h a m

Transformation Management for Continous Impro v e m e n t

Dec. 4-5 Durham

Corporate Office4400 Ben Franklin Boulevard

Durham, North Carolina 27704 USA

1.800.438.5535

Canada1980 Sherbrooke Street West

Suite 800Montreal, Quebec - H3H 1E8

514.933.1462

BrazilAvenida Moema 170, cj 45

Sao Paulo -- SPBrasil 04077-02055.11.5051.7490

United Kingdom3 Gleneagles House

Vernon GateDERBY DE1 1UP

United Kingdom44.1332.367378

France21, avenue Georges Pompidou

69486 Lyon Cedex 03France

33.4.72.91.32.88

Switzerland29, route de Pré-Bois

1215 Geneva 15Switzerland

41.22.710.77.70

Monterrey, MexicoCalzada San Pedro #250 Nte.

Edificio HQCol. Miravalle

CP 64660Monterrey, NL

52.81.50.00.91.36

Shanghai, ChinaRoom 3, 3/F, POS PLAZA

1600 Century AvenuePudong

Shanghai, 200122P.R. China

TBM LeanSigma® Institute 2006 Event Schedule