Efficiency: Systems

• Learning from the mistakes of

others
• Developing sustainable efficiency
• LEAN, JIT and Six Sigma – What’s
the point, anyway?
 Lean: Improves Efficiency
Six Sigma: Improves Effectiveness

Victory has a thousand fathers, but defeat is an orphan.

--John F. Kennedy

The People
At Toyota, we get brilliant results from average people managing a
brilliant process, others get average results from brilliant people
managing broken processes.
- Toyota

Process Improvement
This is just like déjà vu all over again.
--Yogi Berra

2
 Some “World is Flat” Quotes
• “There are two ways to flatten the
world…use your imagination to bring
everyone up or …to bring everyone
down, to the same level”
• “There is one thing…that can never be
commoditized-and that is imagination”
• “One thing tells me that an
‘organization’ is in trouble is when they
tell me how good they were in the past”
(Hammer)
3
 Poor Average Superior
Producers Producers Producers

68%

Bottom 16% Top 16%

.
 What have we
learned?
• Job Fit matters.
• Managers should spend
half their time with top
performers
• Money isn’t #1
• Applying motivation in an
individual way helps
• Retention of all employees
isn’t always desirable
 Top Threats to Success
According to the C-Suite
• Competition
• Health of the Global Economy
• Inability to Attract and Retain the
Best Talent
• Inability to Develop New
Products/Services
SOURCE: Accenture
Pay attention to the language

Historic Process Practices

Assure seamless information flow
Implement integrated product and
process development
Ensure process capability and maturation
Maintain challenges to existing processes
Identify and optimize enterprise flow
Maintain stability in changing
environment
 TQM
BPR
ISO
9000
Pay attention to the language

Lean Thinking
Promote leadership at all levels
Relationships based on mutual trust
and commitment
Make decisions at lowest appropriate
level
Optimize capability and utilization of
people
Continuous focus on the customer
Nurture a learning environment
 Simple Lean definition:

1. Eliminate waste and non-

value-added activity (NVA)

2. Have respect for people

“Value added" happens if:
• The customer must be willing
to pay for the activity.
• It changes the product or
service, making it closer to the
end result that the customer
wants.
• It must be done right the first
time.
 "Respect for people"
is much harder to define.
It means you hold people
accountable to the system,
following it and improving it (the
notion of “kaizen" or continuous
improvement).
 Key Point:

• “Lean” organizations
reward and retain top
performers by aligning
the organization with
their personal values and
achieving job fit.
 Where Lean fits in…
Total Quality Reengineering Traditional Lean
Management Six Sigma
Focus Product Quality Business All Sources of All Enterprise
Processes Product Variation Processes &
People
Change Incremental Radical Process-specific; Evolutionary
Process continuous Systemic

Bus. Improve Increase Minimize Waste Deliver Value

Model Efficiency & Enterprise & Increase to All
Shareholder Performance & Customer Stakeholders
Value Customer Value Satisfaction
 Are you comfortable?
• Lean can create a high
performing environment
• Lean requires strategic HR
• Lean aligns with high
performance people
• Lean requires rethinking
“status quo”
 Key points:

• “Lean” organizations
reward and retain top
performers.
• Lean applies
anywhere.
 Efficiency
• Any production method relies on efficiency –
this can be viewed in different ways:
• Productivity – a measurement of output per
unit of the factor used (labour, capital or land)
Total Output
Productivity = -------------------
Units of Factor
• Technical Efficiency – output produced using
the fewest possible inputs
• Productive Efficiency – output produced at
the lowest possible cost
 What is Waste?
• Consuming more resources than
are necessary to produce the
service that the customer wants
• Pure Waste: Actions that could be
stopped without affecting the
customer
• Incidental Waste: Actions that
need to be done based on how the
current system operates but do
not add value
Pure Waste

Incidental
Waste
Value
 The Simple Part …

Being Able to See IT!

The Real Challenge …

Knowing how to properly
remove it!
Types of Waste
 Over Production
 Inventory
 Waiting
 Transportation
 Motion
 Over Processing
 Quality / Defects
 People’s Skills
• Overproduction - Supplying the process
with more than is needed to meet order
requirements, sooner and faster than it is
needed, causes almost all other types of
waste
• Inventory – Raw materials, work-in-
progress, finished goods; extra inventory is
used to hide other wastes
 Ra
Inventory Hides Waste
w
Ma Finished
ter
ials Goods

Sea of Inventory

Supplier House
Long Quality Poor
issues Keeping
Setups Problems Scheduling
Employee
Employee Communication
Re-work
Availability
Availability Problems

Long Machine
Transportation Downtime
 Waiting Watching others work, waiting for
supplies, instructions, approval,
information, maintenance or
decisions

Transportation Double or triple handling, moving

in and out of storage areas and
warehouses, poor layouts, poor
housekeeping

Motion Walking without working;

searching for tools, materials or
information; reaching, bending or
unnecessary motion due to poor
housekeeping or workplace layout
 Process Repair or rework steps, extra
setup steps, over-specification of
the process, extra work steps

Defects Defective or scrap materials,

low yield, incorrect schedules,
work plans or information

People’s Skills A source of labor only, not seen as

true process experts; do not
involve in finding solutions
 Production Methods
Landscape work
Whilst all output can be
tends
classed to be very
as production,
project intensive
different production
–methods may becould
efficiency more
appropriate
be measured for different
in
products or services.
terms of output
per worker

Copyright: Photolibrary Group

 Production Methods
• Job Production – One-off production -
each item might have particular
specifications
• Flow Production – suitable for mass
market products that are identical
• Batch Production – each stage of the
production process has an operation
completed on it before moving on to the
next stage – allows modifications to be
made to products that otherwise are the
same
 Production Methods
Which
This? is more efficient?

Operation 1 2 3 4 5

Finished
11 10 9 8
Product
 Production Methods

Or this?

1a 1b 1c 1d

Operation 1 2a 2b 2c 4 Finished
product

3a 3b 3c 3d
 Production Methods
Or this?

Cell 1 Cell 2 Cell 3

Finished Product Finished Finished Product

Product
 Production Methods
• Answer – it could be any of them!
• The design of the production space
can influence:
– Output levels
– Factor use
– Efficiency
– Cost levels
– Quality assurance procedures
Kaizen (Continuous Improvement)
 Kaizen (Continuous Improvement)
• Japanese concept – not made
redundant by the decline of the
Japanese economy which may be due to
other institutional factors!
• Focus on gradual and continuous
improvement
• A whole business philosophy
• Importance of EVERYONE buying into
the concept and the vision
 LEAN is Just-in-Time
• JIT philosophy means getting the right
quantity of goods at the right place and the
right time
• JIT exceeds the concept of inventory
reduction
• JIT is an all-encompassing philosophy found
on eliminating waste
• Waste is anything that does not add value
• A broad JIT view is one that encompasses
the entire organization
 The Philosophy of JIT
• All waste must be eliminated- non value
items
• Broad view that entire organization must
focus on the same goal - serving customers
• JIT is built on simplicity- the simpler the
better
• Focuses on improving every operation-
Continuous improvement - Kaizen
• Visibility – all problems must be visible to
be identified and solved
• Flexibility to produce different
models/features
Three Elements of JIT
 Three Elements of JIT -
continued
• JIT manufacturing focuses on
production system to achieve value-
added manufacturing
• TQM is an integrated effort designed to
improve quality performance at every
level
• Respect for people rests on the
philosophy that human resources are an
essential part of JIT philosophy
 Elements of JIT
Manufacturing
• JIT Manufacturing is a philosophy of
value-added manufacturing
• Achieved by
– Inventory reduction - exposes problems
– Kanbans & pull production systems
– Small lots & quick setups
– Uniform plant loading
– Flexible resources
– Efficient facility layouts
 Role of Inventory Reduction

• Inventory = Lead Time (less is better)

• Inventory hides problems
Push Production Systems
• Most Nurseries are “Push”
• Grow inventories
– production decisions are based

on forecasts of demand
– generally not compatible with

JIT
 Pull Production Systems
• Most Landscaping is “Pull”
• Make to order
• work is triggered by order
from external customer, or
“internal” customer (e.g. last
station in line)
• generally compatible with
JIT
Push & Pull Supply Chains

• Just as individual firms can

implement push or pull operations,
entire supply chains can be
– Push
– Pull
– Push-Pull Hybrid
• Some components are push, others pull
 Small Lot Sizes & Quick
Setups
• Small lots mean less average inventory and
shorten manufacturing lead time
• Small lots with shorter setup times increase
flexibility to respond to demand changes
• Strive for single digit setups- < 10 minutes
• Setup reduction process is well-documented
– External tasks- do as much preparation while
present job is still running
– Internal tasks- simplify, eliminate, shorten steps
involved with location, clamping, & adjustments

• Ultimate goal is single unit lot sizes

 Flexible Resources
• Moveable, general purpose
equipment:
– Portable equipment with plug in power/air
– E.g.: drills, lathes, printer-fax-copiers, etc.
– Capable of being setup to do many different
things with minimal setup time
• Multifunctional workers:
– Workers assume considerable responsibility
– Cross-trained to perform several different
duties
– Trained to also be problem solvers
 JIT and TQM- Partners
• Build quality into all processes
• Focus on continuous improvement -
Kaizen
• Quality at the source- sequential
inspection
• Jidoka (authority to stop line)
• Poka-yoke (fail-safe all processes)
• Preventive maintenance- scheduled
• Work environment- everything in its
place, a place for everything
 Respect for People: The Role
of Employees
• Genuine and meaningful respect for
associates
• Willingness to develop cross-functional
skills
• Actively engage in problem-solving (quality
circles)
• Everyone is empowered
• Everyone is responsible for quality:
understand both internal and external
customer needs
 Respect for People: The Role
of Employees
• Associates gather performance data
• Team approaches used for problem-
solving
• Decisions made from bottom-up
• Everyone is responsible for preventive
maintenance
 The Role of Management
• Responsible for culture of mutual
trust
• Serve as coaches & facilitators
• Support culture with appropriate
incentive system including non-
monetary
• Responsible for developing workers
• Provide multi-functional training
• Facilitate teamwork
 Supplier Relationships and
JIT
• Use single-source suppliers when possible
• Build long-term relationships
• Work together to certify processes
• Co-locate facilities to reduce transport if
possible
• Share cost & other information
• Early involvement during new product
designs
 Benefits of JIT

• Reduction in inventories
• Improved quality
• Shorter lead times
• Lower production costs
• Increased productivity
• Increased machine utilization
• Greater flexibility
 Implementing JIT
• Starts with a company shared vision of
where it is and where it wants to go
• Management needs to create the right
atmosphere
• Implementation needs a designated
“Champion”
• Implement the sequence of following steps
– Make quality improvements
– Reorganize workplace
– Reduce setup times
Implementing JIT - continued

– Reduce lot sizes & lead times

– Implement layout changes
• Cellular manufacturing & close proximity
– Switch to pull production
– Develop relationship with suppliers
 JIT in Landscape
• Most of the JIT concepts apply equally
to Service companies
– Improved quality such as timeliness, service
consistency, and courtesy
– Uniform facility loading to provide better
service responsiveness
– Use of multifunction workers
– Reduction in cycle time
– Minimizing setup times and parallel
processing
– Workplace organization
JIT across the organization
• JIT eliminates organizational barriers
and improves communications
– Accounting changes or relies on activity-
based costing
– Marketing by interfacing with the customers
– Finance approves and evaluates financial
investments
– Information systems create the network of
information necessary for JIT to function
 How Will Lean Help Us?
• Reduce Lead Time to our
customers by eliminating waste
from our system
• See things differently than we do
today
• Optimally utilize resources while
meeting our customer’s needs
• Enhance our process flow
• Improve quality and lower costs
 1. Specify Value for Our
Customer(s)
• Providing the right product, at the
right time, in the right quantity, at
the right quality, at the right price,
in the right place in accordance to
the customers requirements
• Usually value added steps lead to a
transformation of the material
from one form to another which
gets the product closer to the
customer’s specifications
 2. Map the Flow of Value in Our Cell
Value Stream

Process A Process B Process C

Raw Customer
Material Finished Product

A value stream is all of the value-adding

activity AND all of the non-value adding
activity (pure waste and incidental waste)
required to provide a product/service to a
customer
5. Seek Perfection

PDCA
Lean Tools
 Hoshin Plan
A planning tool that helps us identify the key
focus points and strategies we will use to steer
us towards our vision.

• Enables everyone to ‘see’

where we’re going and
our plans to get there
• Build plan and strategies
as a team
Vision • Shared responsibility for
Key Result Areas
Key Result Measures getting results
Key Strategies
 5S
Focuses on effective workplace organization
and standardization it allows us to easily spot
variation from standard operating conditions.

• Cleaner, safer work

environment
• Organized, user friendly
workstations
• Open up space and
reduce clutter
 Workforce Flexibility
The ability of the workforce to “flex” to other
jobs as demand fluctuates within the system,
and the efforts the organization undertakes to
ensure this occurs.
• Improve worker skill set
• Maximize organizational
flexibility
• Focused training and
development plans
• Allow the ability to flex to
our customer’s demands
 Standardized Work
A step-by-step description of work activity used
every time by everyone to safely complete a
task based on best known practices.
Standard Work Sheet
• Operators involved in
Proper PPE determining best
practices
3 • Minimizes and highlights
4 process variability
6 • Everyone learns best
2
5 practice

1
 Kanban
A visual system that easily communicates the
need for parts to be either replenished or
consumed. Designed to improve material flow
and control inventory levels.

• Workers produce product

based on actual usage
• Minimizes inventory by
tying production to
consumption
X X X
(make one move one)
 Zero Defect Quality
The principle that defects are prevented by controlling
the performance of a process so that it cannot produce
defects through mistake proofing and failsafe methods.

• Improved quality and

customer satisfaction
• Solutions at the source –
employees aid in problem
solving and in developing
creative, more effective
corrective actions
 Kaizen
A system involving every employee that is
based on making little changes on a regular
basis, anywhere changes can be made.

• Continuous small
improvements
• Changes are
implemented quickly
• Everyone gets involved
 Value Defined
Value-Added Activities
 Transforms or shapes material or information
 Customer wants it
 Done right the first time

Incidental Waste
 No value created but required by current technology
 No value created but required by current thinking
 No value created but required by process limitations
 No value created but required by current process

Pure Waste
 Consume resources but creates no value for the customer
 Could be stopped and it would be invisible to the customer
 Lean Emphasis

Initial Value Waste

Process
General Value Waste
Waste and Value
Both Decrease
Process
Reduction Target & Reduce Waste Value Maintained
Waste Only Value Waste Maintain Value Resources Decrease

eduction
Apply Resources
Value Value Waste
to Create More Value
Value Increased
Resources Focused

Creation
Resource distribution

Opportunity
Opportunity for
for improvement
improvement by
by reducing
reducing waste
waste
and
and creating
creating additional
additional value
value
How Do We Succeed with Lean?
• As a team – open minded, supportive
• Understand the concepts and accept all
aspects of the lean process, including
those that may cause undesirable
effect in the short term
• Aligned focus from the top to the
bottom
• Effectively use lean methodologies
• Carefully plan implementation to
remove waste
• Allocate the proper resources
Expected Lean Results
Costs
Defects (99%)
Inventory (10 fold)
Lead Time (90%)
Machine Downtime
Space (50%)

Capacity
Customer Responsiveness
Efficiency
Employee Satisfaction
Flexibility – Demand Flux
 Small Steps and Continuous
Improvement
• “The hallmark of a truly successful
organization is its willingness to
abandon what made it successful and
to start fresh” (Hammer)
• Empowering “innovation”
• Routine vs. Process

71
Why is Six Sigma accuracy important?

Because at 99% accuracy (4 Sigma):

• Two short or long landings at major airports
each day
• 5,000 incorrect surgical procedures every week
• 20,000 lost articles of mail per hour
• No electricity for almost 7 hours each month
• At least 200,000 wrong drug prescriptions each
year
• 50 dropped newborn babies each day

Source: American Society for Quality

72
 Lean Six Sigma: Two Complementary Approaches

Six Sigma…
• Emphasizes need to recognize opportunities and eliminate defects
• Recognizes that variation hinders ability to reliably deliver high-
quality services
• Requires data-driven decisions and incorporates a comprehensive set
of standard tools for effective problem solving

Lean…
• Focuses on maximizing process velocity
• Provides tools for analyzing process flow and delay times at each
activity in process
• Removes non-value added steps in process
• Provides a means for quantifying and eliminating the cost of
complexity

73
 Attitude is Critical

“If you think you can or you think

you can’t. You’re Right.”

Henry Ford
Six Thinking Hats®
 Outlines

1. Background
2. Purpose
3. Six Thinking Hats
4. Exercise
 Background

 “Wear” one hat at a time when considering a problem.

 Everyone wears the same color hat at the same time.

 Look at problem from the same perspective.

 Purpose

 Power
 Time Saving
 Removal of Ego
 One Thing at a Time
 White Hat

Facts, Figures and Information

What information do we have ?

What information do we need ?

What information is missing ?

ow are going to get the information we need ?

What questions do we need to as

 Two Tiers

CHECKED
FACT

UNCHECKED
FACT
Computer does not have emotions.

Pump out the Figures, Facts and Information.

 情感
Sentiment 感想
Emotions
感觉 Intuition Feelings
Hunches
Affection 情绪
“Exact opposite of White Hat thinking, which is
neutral, objective and free of emotional flavour.”

Edward de Bono
 Black Hat
Careful
Judgement Critical
Logical Cautious
Risk Assessment
 Black Hat

 Black Hat thinking is concerned with

caution and careful.
 We need to consider risks, dangers,
obstacles, potential problems and
downside of a suggestion
 Black Hat

You should think like him !

Yellow Hat
 Yellow Hat

“Exact opposite of Black Hat thinking, which is

careful, critical and fill with judgement.”
 Yellow Hat

Do you expect to find fish here ?

Green Hat
 Green Hat

“The Green Hat Thinking is concerned with New ideas

and New ways of looking at things.”
 Blue Hat

a. Organisation of thinking

b. Control of the other hats

 Blue Hat

“Blue Hat Thinker is responsible for summaries,

overviews and conclusions.”

“Blue Hat Thinker monitors the thinking and ensures

that the rules of the game are observed.”
 Blue Hat

You are the referee.

References