Shown at the Lean Summit 2013 - Lean Transformation: Frontiers and Fundamentals on 5th, 6th & 7th November 2013

1. IMPLEMENTING THE LEAN
TURNAROUND
November 5, 2013

2. TODAYS SESSION
• Introductions - - - Your Objectives
• Art Byrne Background
• Lean vs. The Traditional Approach
• Obstacles you Will Have To Overcome
• Why Lean?
• What You Need To Know Before You Start
• Lean Implementation
• The Leaders Role

3. ART BYRNE BACKGROUND
• General Manager High Intensity And
Quartz Lamp Department, General Electric
• Group Executive Danaher Corporation
• CEO The Wiremold Company
• Operating Partner, JW Childs Associates
31 YEARS AND COUNTING

4. PRODUCTIVITY
EQUALS WEALTH

5. LEAN vs. TRADITIONAL
APPROACH
Lean Thinking Is The Opposite Of The
Traditional Approach
Hard To Accept That Everything You Have
Been Taught/Learned Is Wrong
Even Harder For The Rest Of Your
Associates To Accept And Change
EVERYTHING HAS TO CHANGE

6. LEAN vs. TRADITIONAL
• Understand Value Added vs. Non Value
Added
• Focus On Processes Not Results
• Move From Batch To Flow
• Switch from Push To Pull
• Eliminate Inventory vs. Rely On Inventory

7. LEAN vs. TRADITIONAL
• Long Production Runs vs. Short Runs,
Quick Changeovers
• Big Capital Spending vs. Use Your Brain
And Not Your Wallet
• Buy Large Quantities For Volume
Discounts vs. Daily Deliveries
• Encourage Big Orders/Volume Discounts
vs. Level Loading, One Price Into Stock

8. EVERYTHING HAS TO CHANGE
• You Can’t Drop Lean On A Traditional
Batch Operating Structure
• Sales Approach Must Change
• Accounting Approach Must Change
• Different Approach To People
• Management Focus Is Different
THIS IS A BIG UNDERTAKING

9. TRADITIONAL ORGANIZATION
CHART IS UPSIDE DOWN
• Traditional: CEO On Top Of Pyramid, Work
Force [Value Adders] On The Bottom
• Lean: Value Adders On Top CEO on Bottom
• ROLE OF MANAGEMENT IS TO SUPPORT
THE VALUE ADDERS EVEYDAY, IF NOT YOU
ARE WASTE

10. YOU WILL FACE A
LOT OF OBSTACLES

11. OBSTACLES
• People Don’t Like Change
• Your People Will Challenge You/Fight You
• “We Don’t Make Cars”
• “This Will Never Work Here”
• “We Are Different Than Other Companies
• “This Is The Stupidest Idea Yet”

12. OBSACLES CONTINUED
• Getting You Staff To Function Like A
Team
• Overcoming/Dealing With “Concrete
Heads”
• Changing The Way Direct Supervisors
Approach/Deal With The Work Force
• Customer Service Issues Will Crop Up

13. MORE OBSTACLES
• Every Machine Will Likely Have To Be
Moved - - - More Than Once
• Not Everything Will Go Right The First
Time
• “See, I Told You This Wouldn’t Work”
• Job Classifications Will Have To Be
Consolidated
• The Approach To Pay May Have To
Change

14. EVEN MORE OBSTACLES
• How Do You Get Everyone On Board?
• How Do You Educate Everyone About
Lean?
• Where Do You Get The Lean Knowledge?
• How Do You Cross Train Your People?
• How Do You Hire The Right People?

15. LEAN IS EASY TO SAY HARD TO
DO
ARE YOU STILL
INTERESTED IN MAKING
THE SHIFT TO LEAN?

16. WHY LEAN?

17. WHY LEAN?
• You Are Running A Business
• You Should Want To Maximize Results For All
Stakeholders
• Your People
• Your Customers
• Your Shareholders
LEAN IS THE GREATEST STRATEGIC WEAPON
YOU WILL EVER SEE

18. WHY LEAN?
• Deliver Value To Your Customers
• Gain Market Share And Grow
• Fantastic Financial Results
• Create Wealth For All Stakeholders
• Enhance The Skills And Value Of Your
Employees

19. WIREMOLD RESULTS
• Lead Times From 4-6 Weeks To 1-2 Days
• Productivity Up 162%
• Gross Profit From 38% To 51%
• Machine Changeovers From 3x Per Week To 20-30 A
Day
• Inventory Turns From 3x To 18x
• Customer Service From 50% To 98%
• Sales More Than Quadrupled
• EBITDA Grew From 6.2% To 20.8%
• Operating Income Up 13.4x
• Enterprise Value Increased By 2,467%

20. VIRGINIA MASON RESULTS
• Nurses Spend 90% With Patients vs.35%
• Time To Report Lab Results Down 85%
• Cost Of Supplies Down $1Million A Year
• Hospital Liability Costs Down 49%
• A/R Days >90 Days Down 74%
• Surgery Center; Cases Per Day Up 60%
• Pharmacy; Order To Available Time -93%
• Margin $’s; $0.7M in 2,00 To $41M In 2,010

21. ASR RESULTS
• Result %Change
• Inventory Turns 2.5x To 6.2x +148%
• W/C As % To Sales 34% To 15% -50%
• Customer Service 85% To 98% +15%
• EBITDA Margin 17% To 23% +35%
• Cash Freed Up $65 Million NA

22. ESSELTE RESULTS
• From $5M EBITDA In 05 To $80M Now
+1,500%
• Reduced Working Capital By $200 Million
• Lowered Headcount By 47%
• Freed Up 2.4M Sq. Feet Of Space
• Gained 9 Points Of Gross Margin In
Europe Alone

23. WHY DOESN’T EVERYONE DO
THIS?
• “I Can Tell You”
• “I can Show You”
• “I Bet You Can’t Do It”
• Yoshiki Iwata
CHANGING OLD HABITS IS HARD WORK

24. WE THINK ABOUT THIS ALL
WRONG
• Lean Is A Strategic Approach To How You
Run Your Business
• It Is Not Just A Bunch Of Tools
• Saying “We Have Black Belts And Green
Belts So We Are Lean” Is Ridiculous
• It Is Not Just Some Training Exercise

25. TO BE A LEAN ENTERPRISE
• All Functions Must Participate
• Otherwise You Will Fight Yourself
• Customers See You As A Single Entity
DON’T JUST DO LEAN- BE LEAN

26. WHAT DO YOU
NEED TO KNOW?

27. MANAGEMENT MUSTS
• Lean Is The Strategy
• Lead From The Top
• Transform The People
LEADERSHIP IS THE KEY INGREDIANT

28. STRATEGIC EXAMPLE
• Company A Has A 1 Hour Set Up Time
• Company B Has A 1 Minute Set Up Time
• Who Has The Lowest Cost?
• Who Has The Best Customer Service?
MANUFACTURING OR STRATEGIC?

29. LEAN IS ALL
ABOUT PEOPLE

30. WITHOUT LEADERSHIP
COMMITMENT DON’T EVEN
START DOWN THE LEAN
PATH

31. LEAN FUNDAMENTALS
Work To TAKT Time
One Piece Flow
Standard Work
Pull System
BE RELENTLESS IN ESTABLISHING
THESE EVERYWHERE

32. THE BASIC THRUST
• Improve Your Value Adding Activities
• Deliver More Value To Your Customers
• Compete On Your Operational Excellence
LEAN IS A TIME BASED GROWTH
STRATEGY

33. UNDERSTAND VALUE ADDED
• Value Added
• Non-Value Added But Necessary
• Non-Value Added- - - Waste
ELIMINATE THE WASTE

34. HOW TO IMPLEMENT A
LEAN TURNAROUND

35. OBTAIN THE LEAN KNOWLEDGE
• Books - - - - Plenty Of Options
• Visit Lean Companies
• Participate In A Few Kaizens Yourself
• Find A Lean Consultant
• Get As Much Personal Knowledge As You
Can

36. UP FRONT WORK
• Articulate The Vision/Strategy
• Establish Core Values
• Set Expectations
• Lean Consultant Plus A KPO Office

37. WIREMOLD STRATEGY
Be The Leading Supplier In The Industries We Serve And One Of The
Top 10 Time Based Companies – Globally
1. CONSTANTLY STRENGTHEN OUR BASE OPERATIONS
100% On Time Customer Service
50% Reduction In Defects – Each Year
20% Productivity Gain – Each Year
20x Inventory Turns
Visual Control And The 5S’s
2. DOUBLE IN SIZE EVERY 3 TO 5 YEARS
Pursue Selective Acquisitions
Use QFD To Speed New Product Introductions

38. CORE VALUES
PEOPLE
CUSTOMERS
KAIZEN
COMBINE INTO A KAIZEN CULTURE

39. EMPLOYEE EXPECTATIONS
Respect Others
Tell The Truth
Be Fair
Try New Ideas
Ask Why
Keep Your Promises
Do Your Share

40. ORGANIZE FOR LEAN
• Create A Value Stream Organization
• Team Leaders
• KPO Office
• All Equipment And Support Staff
• Own The Key Measurements
• Weekly Report Out To CEO And Staff

41. VALUE STREAM STRUCTURE
• Team Leader – Sits On The Shop Floor
• Buyer/Planner
• Shop Floor Engineers
• Cell Leaders
• Operators
• Support Functions e.g Marketing, Finance

42. TEAM LEADER PROFILE
• Self Starter – Problem Solver
• Relates Well To People Up Or Down
• Able To Run A Reasonable Size Business
• Potential To Grow At Least Two More
Levels
• Compatible With Customers And Sales
Force

43. GETTING STARTED
CEO Should Present The Strategy
WHAT
WHY
HOW
EXPECTED RESULTS
CEO Should Do Initial Training
CEO Should Select Initial Kaizens – Set
Stretch Goals

44. KAIZEN OBJECTIVES
Focus On Value Adding – Eliminate Waste
From Batch To Flow, From Push To Pull
Set Up Reduction And The 5S’s Are
Foundational
INVENTORY IS THE ROOT OF ALL EVIL

45. SETUP REDUCTION EXAMPLES
• Rolling Mill 720m To 34m -95%
• 150 Ton Press 90 To 5 -94%
• PM Punch Press 52 To 5 -90%
• Hole Cut Mill 64 To 5 -92%
• 2.5” Extruder 180 To 19 -89%
• Injection Molder 120 To 15 -88%
AVG. SETUP REDUCTION = 91%

46. THE 5S’s
• Seiri; Or Sort, Throw Away What Is Not
Needed
• Seiton; Or Straighten, To Create And
Maintain Order
• Seiso; Or Shine, To Clean
• Seiketsu; Or Standardize, To Develop
Rules To Maintain The First Three S’s
• Shitske; Or Sustain The Disipline

47. KAIZEN IS A DOING ACTIVITY
• Full Time Job For The Week
• Trying To Achieve Stretch Goals
• Mixture Of Hourly And Salaried People
• Hands On In The Gemba
• Everyone Is Learning To See

48. TYPICAL RESULTS OF A ONE
WEEK KAIZEN
• Cut Lead Times 90%
• Reduce Staffing From 10 To 5
• Reduce Inventory By 70%
• Reduce Floor Space By 50%
• Reduce Defects By 60%
• Reduce Travel Distance By 90%
• Cut Setup Time By 90%
• Connect The Customer To The Shop Floor

49. KAIZEN FOCUS
• Go After The Biggest Value Stream First
• Create Model Lines Or Model Factories
• Don’t Spread Out Your Efforts
• Don’t Dabble – 2 Kaizens Per Week, Per
Facility

50. KAIZEN REQUIREMENTS
• Up Front Homework – Stretch Goals
• Team Leaders – Co-Leaders
• Owner Participation
• Kick Off Meeting And Daily Leaders Mtgs
• Wrap Up Meeting – Celebration
• Publicize The Results To Everyone

51. LEADERS ROLE
• Hands On – Out Front
• Lead By Example
• Learn By Doing
• Drive Lean Fundamentals – No Other
Option
• Commit To Becoming A Lean Expert

52. LEADERS ROLE
• Make The Case – Keep Making It
• Set Stretch Goals
• Push Through Problems
• Overcome The “Lore”
• Get Rid Of “Concrete Heads”
• Don’t Allow Backsliding

53. MAKE THE CASE
THE WALK OF SHAME

54. LEADERS ROLE
• Establish Daily Management
• Support Your People – Listen To Them
• Everyone Is On Board – No Excuses
• Align Your Resources – Hoshin Planning
• Obtain The Lean Knowledge
• Take All The “Leaps Of Faith”

55. LEADERS ROLE
• Make It Ok To Fail
• Hard To Get Hired – Hard To Get Fired
• Go See – Understand Why
• Start All Plant Visits On The Shop Floor
• Always Leave Homework – Physical
Actions
• Ask Why – Not Who

56. LEADERS ROLE
• Stop Managing Last Months Results
• Be On 5-6 Full Week Kaizens Per Year
• Your Managers Need To Be Enablers
• Role Is More Player/Coach –Coach To
Win
• Consistency Is Key – Show Me The Data
• Create The Future Leaders – Ohno Circle

57. MANAGE TO THE OPERATIONAL
EXCELLENCE TARGETS
100% On Time Customer Service
20% Productivity Gain – Each Year
50% Reduction In Defects – Each Year
20x Inventory Turns
Visual Control And The 5S’s
WHAT DOES WINNING LOOK LIKE?

58. DUMP YOUR BAD HABITS
• Standard Cost Accounting
• Traditional Measurements
• Big End Of Month Reviews
• Lengthy Capex Reviews
LOOK FORWARD NOT BACKWARD

59. SUMMARY
“Byrne-san, If You Don’t Try Something No
Knowledge Will Visit You”
Chihiro Nakao