BPM Model 2: Focus Business Model Guest: Forsvaret Session 4

BPM Model 2: Focus Business Model Guest: ForsvaretSession 4 Ann Rosenberg February 28th 2012

Agenda • Introduction to the session today • Strategy/ BPM at the Danish Defense: Claus Dahl • LEAN

Overview of all sessions

BPM Set-up Phase part 2BPM Methodology (LEAN)LEAN Exercises (Wipro and Bayer)

Linking the Strategy Model to the Operation Model Source: Linking Strategy to Operations: Process Models and Innovation by David P. Norton and Randall H. Russell

The Evolution of Process Management Evolution (Quality) BusinessProcessManagement Business ProcessRe-engineering LeanManufacturing Total QualityManagement Six-sigma Toyota ProductionSystem IndustrialEngineering Evolution (Time) Source: Business Process Management – The SAP Roadmap, Rosenberg

What is Lean?Lean manufacturing, lean enterprise, or lean production, often simply, "Lean Lean manufacturing is a management philosophy derived mostly from the Toyota Production System (TPS). The core idea is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources. A lean organization understands customer value and focuses its key processes to continuously increase it. The ultimate goal is to provide perfect value to the customer through a perfect value creation process that has zero waste. To accomplish this, lean thinking changes the focus of management from optimizing separate technologies, assets, and vertical departments to optimizing the flow of products and services through entire value streams that flow horizontally across technologies, assets, and departments to customers. Eliminating waste along entire value streams, instead of at isolated points, creates processes that need less human effort, less space, less capital, and less time to make products and services at far less costs and with much fewer defects, compared with traditional business systems. Companies are able to respond to changing customer desires with high variety, high quality, low cost, and with very fast throughput times. Also, information management becomes much simpler and more accurate. Source: http://www.lean.org/whatslean/

The original seven muda – 7 wastes • The original seven muda are: • Transport (moving products that are not actually required to perform the processing) • Inventory (all components, work in process and finished product not being processed) • Motion (people or equipment moving or walking more than is required to perform the processing) • Waiting (waiting for the next production step) • Overproduction (production ahead of demand) • Over Processing (resulting from poor tool or product design creating activity) • Defects (the effort involved in inspecting for and fixing defects) • An easy way to remember the 7 wastes is TIMWOOD. • T: Transportation, I: Inventory, M: Motion, W: Wait, O: Over-processing, O: Over-production, D: Defect Source: http://www.lean.org/whatslean/

Principles of Lean • The five-step thought process for guiding the implementation of lean techniques is easy to remember, but not always easy to achieve: • Specify value from the standpoint of the end customer by product family. • Identify all the steps in the value stream for each product family, eliminatingwhenever possible those steps that do not create value. • Make the value-creating steps occur in tight sequence so the product will flow smoothly toward the customer. • As flow is introduced, let customers pull value from the next upstream activity. • As value is specified, value streams are identified, wasted steps are removed, and flow and pull are introduced, begin the process again and continue it until a state of perfection is reached in which perfect value is created with no waste. Source: http://www.lean.org/whatslean/

Value Stream Mapping Value stream mapping is a lean manufacturing technique used to analyze and design the flow of materials and information required to bring a product or service to a consumer. At Toyota, where the technique originated, it is known as "material and information flow mapping”. It can be applied to nearly any value chain. Source: Business Process Management – The SAP Roadmap, Rosenberg

Lean Action Plan – Getting Started: • While every individual or company embarking on a lean journey will have different challenges based on their particular set of circumstances, there are several crucial steps that can help reduce resistance, spread the right learning, and engender the type of commitment necessary for lean enterprise. • 1. Getting Started: • Find a change agent, a leader who will take personal responsibility for the lean transformation. • Get the lean knowledge, via a sensei or consultant, who can teach lean techniques and how to implement them as part of a system, not as isolated programs. • Find a lever by seizing a crisis or by creating one to begin the transformation. If your company currently isn’t in crisis, focus attention on a lean competitor or find a lean customer or supplier who will make demands for dramatically better performance. • Forget grand strategy for the moment. • Map the value streams, beginning with the current state of how material and information flow now, then drawing a leaner future state of how they should flow and creating an implementation plan with timetable. • Begin as soon as possible with an important and visible activity. • Demand immediate results. • As soon as you’ve got momentum, expand your scope to link improvements in the value streams and move beyond the shop floor to office processes. Source: http://www.lean.org/whatslean/

Lean Action Plan – Creating an Organization to Channel Your Value Streams • 2. Creating an Organization to Channel Your Value Streams: • Reorganize your firm by product family and value stream. (Process map) • Create a lean promotion function. (BPM Office) • Deal with excess people at the outset, and then promise that no one will lose their job in the future due to the introduction of lean techniques. • Devise a growth strategy. • Remove the anchor-draggers. • Once you’ve fixed something, fix it again. • “Two steps forward and one step backward is O.K.; no steps forward is not O.K.” Source: http://www.lean.org/whatslean/

Lean Action Plan – Creating an Organization to Channel Your Value Streams • 3. Install Business Systems to Encourage Lean Thinking • Utilize policy deployment. (Governance) • Create a lean accounting system. (Measurement system) • Pay your people in relation to the performance of your firm. • Make performance measures transparent. • Teach lean thinking and skills to everyone. • Right-size your tools, such as production equipment and information systems. • 4. Completing the Transformation • Convince your suppliers and customers to take the steps just described. • Develop a lean global strategy. • Convert from top-down leadership to leadership based on questioning, coaching, and teaching and rooted in the scientific method of plan-do-check-act • More Lean Resources Source: http://www.lean.org/whatslean/

Common Lean Questions • How does lean apply to non-manufacturing settings? • Every core lean principle applies just as strongly, if not more so, beyond the shop floor. In fact, many of the most exciting breakthroughs are taking place in areas such as services, healthcare and government. • As John Shook LEI senior advisor and co-author of Learning to See, says, "TPS is described as a manufacturing system, but the thinking of TPS or lean applies to any function. Whether you¹re dealing with 15,000 parts, 15 parts, or just providing a service, lean works. It works because it is a way of thinking, a whole systems philosophy. Techniques aside, lean thinking gives you a broad perspective on providing goods and services that goes beyond the bottom line, beyond the stodgy principles of mass-producing capitalism. It is a human system, customer focused, customer driven; wherein employees within and outside the workplace are also customers.“ Source: http://www.lean.org/whatslean/

Common Lean Questions • What are the most common mistakes in implementing lean?To start with, lean must never be seen as a tool for headcount reduction or mindless cost-cutting. This fundamentally misses the purpose of lean, which is to create value through eliminating waste. As companies improve their processes they should be able to reallocate their productive resources to new value-creating work. • Another important attitude to avoid from the beginning is the impulse to implement individual lean tools without seeking to understand the system in which they fit. This is hard to avoid, since many tools, deliver immediate payoffs. But ultimately all lean workers must understand the "why" behind the tools, or their value will be lost. • Lean beginners should also limit the scope of their initial project so as to better insure success, be sure that they have a leader with deep knowledge and a gemba attitude i.e. always base one's thinking on a close observation of the work itself, and never relax in their efforts. Indeed, one of the hardest challenges they will face is the degree to which individual lean successes will invariably uncover new problems and greater challenges. So in this regard, simply be aware of how difficult this work will be. Source: http://www.lean.org/whatslean/

Common Lean Questions • How does lean compare to other improvement processes such as Six Sigma or Theory of Constraints?While there are many specific differences among the different schools of thought, Jim Womack cautions against getting lost in the competing schools. For veterans of each practice often get lost in finely detailed arguments over technical or even philosophical differences. In an e-letter outlining the key differences, he nonetheless grounds the discussion by saying, “At the end of the day we are all trying to achieve the same thing: The perfect value stream.” His letter gives a nice overview of how to view each approach. • Quality Progress magazine published an artcleHow To Compare Six Sigma, Lean and the Theory of Constraints which offers a very good overview that can help you choose the best framework for your organization. Source: http://www.lean.org/whatslean/

Automotive – examplehttp://www.sap.com/customer-showcase/index.epx Source: http://www.lean.org/whatslean/

Breakthrough Moments in Leanhttp://www.lean.org/WhatsLean/Timeline.cfm Source: http://www.lean.org/whatslean/

LEAN Skills and Education

Lean and Agile Software Development at SAPCustomer Case • http://www.sdn.sap.com/irj/scn/weblogs?blog=/pub/wlg/28111

BPM Model 2: Focus Business Model Guest: Forsvaret Session 4