Breakout Session # 205 Tim Ortel, CPCM, Intuitive Surgical Date 15 April 2008 Time 2:10 PM – 3:10 PM

2. Can Contracting Be “Leaned”? Breakout Session # 205 Tim Ortel, CPCM, Intuitive Surgical Date 15 April 2008 Time 2:10 PM – 3:10 PM

3. No “Fat” Streamline flow Optimized process Promotes Value Add Reduces Cost Lead time A philosophy? A process? An end result? Continuous improvement “Good enough is not good enough” What is Lean?

4. Lean application • Typically in manufacturing • Promotes pull versus push • Integrates people, process, tools to avoid waste • At work in: • Automotive, electronics, medical • Aerospace, construction

5. Lean in non-production? • Insurance claims • Invoice payments • Order management • Purchase order process • Is there “lean”ed contracting? • Yes!!

6. No more “Muda” 無駄

7. Flow charts Value stream maps Pareto charts Failure analysis Cross training Fishbone charts COMMWIP 5 Whys Just In Time Kanban Kaizen/Blitz Force Field Analysis Single Piece Flow 5S Tools that support lean

8. Sample “Fishbone” Ishikawa Chart

9. Pareto Chart

10. Flow Chart Example

11. Flow Chart Example

12. Sample Value Stream Map ...

13. Sample Value Stream Map (www.sme.org)

14. Force Field Analysis

15. Why take the lean journey? • Takes care of customers – adds value • Improves enterprise processes • Develops employees, enhances teamwork • Makes improvement a way of life, not a fad • Reduces lead times, costs, variation • Makes processes simple, repeatable, sustainable • Competitors will go lean if you don’t (and are?)

16. Let’s COMMWIP-Proof the process • Do you want to achieve “lean”ed? • Why? • No more “MUDA” – waste • Build up trust in process • Improve (& simplify) process

17. What is waste (MUDA) • Why eliminate waste? • Customers don’t want to pay for it • Employees don’t like it • Suppliers don’t understand it • “Any element of processing or distribution that adds no value to the final product (service) – waste only adds cost & time” (& frustration)

18. Correction Overproduction Motion Material Movement Waiting Inventory Process Overproduction Waiting Transportation Inventory Motion Over processing Defective units COMMWIP – the 7 deadly wastes

19. Sizing up COMMWIP wasters • How you identify waste • Brainstorming, flow charts, pareto charts • How you document it • Fishbone (Ishikawa), pareto charts • How you fix it • Brainstorm, failure mode analysis • Flow chart, force field analysis

20. Correction (COMMWIP) • Doing things over again, rework, repeat • Leads to added waiting, motion? • Types of contract waste • Wrong specification • Wrong approvals • Wrong metrics, measures • Wrong process design

21. Overproduction (COMMWIP) • Building too many • Poor yields, bad forecast, variation • Types of contract wasters • Unnecessary, & too many reports • Excessive copies • Process redundancy • Too many drafts before final • Over-specification

22. Motion (COMMWIP) • Unnecessary work movements • Extra steps which don’t add value • Multiple repeat steps in process • Contract wasters • Excessive, unnecessary approvals • Extra process steps (reviews, emails) • Excessive meetings (or wrong focus)

23. Waiting (COMMWIP) • Lots of handoffs in process • Queues, buffers • Reviews, approvals • Waiting due to meetings, decisions signoffs • Unnecessary meeting participation • Lacking a “KISS” perspective

24. Processing (COMMWIP) • Long process flow • Complex process design • Serial versus concurrent steps • Redundant steps and/or approvals • Extra time to rework, fix • “We’ve always done it this way”

25. Kaizen 改善 • 改('kai') KAI - “change” • “action to correct” • 善('zen') ZEN - “good”, “for better” • A culture of sustained continuous improvement • Eliminate waste in systems and processes • Begins & ends with people • Involved leadership guidance • Continuously improve: quality, low cost, & delivery • Transforms companies to 'Superior Competitors'

26. Kaizen – what is this? 改善 • Cross functional improvement team • A project – to solve a problem, improve • Evaluate and measure “as is”, “before” • Brainstorm “could be, should be” • Prototype solutions, measure “after” • Cross train, then implement

27. Kaizen sequence of events • Define problem • Define root cause: (fishbone) • Research root cause: (brainstorm, paretos) • Define “as is” process – draw it: (flow chart) • Brainstorm fixes, improvements (force field) • Structure “could be” process – draw it (flow chart) • Prototype a “should be” process – cross training • Change process (use force field analysis) • Measure before & after – define metrics!!!

28. The PDCA cycle PLAN ACT/ADJUST DO CHECK

29. Value Stream Map Example(www.lean.org)

30. From “muda” to “shinrai” 信頼 Shinrai “trust” 価値 Kachi “value” 無駄 Muda “waste”

31. No more “Muda” 無駄

32. Intuitive Surgical

33. Buying a robotics surgery system Legal Review Sales Contract Customer Need Ship Install Service Build Make To Stock

34. Why “lean”ed • Lean is a tool: leverages process, projects • COMMWIP-proofing enhances lean • Kaizen: a project tool (within lean) • “Good enough is not good enough” • It’s not just enough to win – • Better yourself in the process also!

35. Checking out “lean”ed contracting • “Applying Lean Thinking to Govt Contracting” • Dr. Rose M. Smith (On Line Powerpoint) • Air Force Smart Operations 21 (AFSO21) • http://www.newsblaze.com/story • DAU – Lean Enterprise Model • http://www.dau.mil/educept • 754th Electronics Systems Group • http://integrator.hanscom/af.mil/2007

36. You can “lean” your contracts • Use kaizen (“KISS”) to simplify, optimize • Yet comply with legal policy/guidelines • FAR, State, Local, Sarbanes Oxley • When processes are “discretionary” • “Think out of the box” • “Draw outside of lines” • No more “That’s the way we always have..”

37. Remember • Process should be “value add” • Process should serve customers • Do users trust the process? • Be a change agent (vs. an observer) • Think from a “clean” whiteboard • Keep a Plan, Do, Check, Adjust focus

38. Closing • Questions? • Tim Ortel, CPCM, CFCM, CPIM • tlortel@yahoo.com • Thank you!