LeanSigma ® Fundamentals Module 2 – Time-Based Strategy & LeanSigma Execution

Lean’s foundation: Time-Based Strategy leads to success. Build an organization with fast response time in serving customers and preempting competitors, and you will grow profitably. © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 2 The Old Business Analogy … a Chess Game The New Analogy … a Dogfight observe orient decide act

IMS departments have different objectives, but speed is the common element. “Today, it’s all about speed.” –Tom Peters 3 Lean = Speed Lean tools and techniques are the most effective way to speed up every part of your operations © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Have lead times 25% - 50% shorter than their competitors in business processes Leverage time advantage to achieve growth 3X – 5X industry average Attract the most profitable customers and enjoy price premiums of 20% or more than their industry average 4 Time-based companies grow faster and can often charge a premium. © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Process time in IMS kaizens is generally improved more than 20%. © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. Percent Improvement 5

Removing waste reduces time. Cycle time: the time spent to complete an activity EXCLUDING delays (Man hours or Effort time) Lead time: the time required to complete an activity INCLUDING delays (Elapsed time) 6

IMS has reduced process time in many kaizens. In Poland, automation of Bridging programs and elimination of redundant checks will reduce cycle time by 30%, enabling delivery1 day in advance and saving 300 hrs/month ($14.4k/year) In the US, the team reduced the time it takes to validate drug rebates from 9 – 15 days down to 1 – 5 days by reorganizing tasks and reducing bottlenecks. © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 7

Time-Based strategy removes waste. 8 The key is to reduce waste like waiting and delays in order to focus on “core value” © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Anything that doesn’t add value is waste. “Tim Wood” helps us remember the types of waste. T ransportation (materials movement) I nventory (stored finished goods) M otion (people movement) W aiting (delays) O ver-processing (over engineered) O ver-production (making more than needed) D efects (quality problems) 9

Time-based strategy is more effective than traditional improvement. © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 10 Minor Improvement Traditional Improvement 0.5% 99.5% 10% LeanSigma Improvement Major Improvement 90% Typical Company Original Lead Time 1% 99% Value-Adding ActivitiesNon-Value-Adding Activities

When speed improves, cost and quality also improve. By reducing end-to-end lead time we can simultaneously improve our service, cost, and quality… © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 11 “Time is the scarcest resource and unless it is managed, nothing else can be managed.” Peter Drucker “Time is the scarcest resource and unless it is managed, nothing else can be managed.” Peter Drucker

Lean and Six sigma are complementary approaches. Lean Manufacturing is about flow, speed and efficiency Six Sigma is about precision and accuracy 12 Lean Manufacturing and Six Sigma are both process improvement methodologies that began to emerge in the US in the late 1970’s Taichi Ohno Father of Lean Manufacturing Edward Deming “Father” of Six Sigma © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

Elements of LeanSigma ® have developed over the last five decades. © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 13 Create flow & eliminate waste Improve capability & reduce variation ®

Lean is a simple concept. Lean is simply creating more value for customers by eliminating wasted activities. –It has been used in manufacturing to manage competitive pressures and heightened customer expectations. –In the last decade, it has been used increasingly in service industries. Banks Hospitals Government © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 14

There are some common misunderstandings about Lean. It is not a substitute for leadership. It is not a silver bullet. It is not a “manufacturing thing” It does not require specialized knowledge – everyone can play. It is not a replacement or competing approach to Six Sigma – it is complementary. © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 15

There is an advantage to using Lean and Six Sigma together. Each approach has strong tools to solve different kinds of business challenges. –Six Sigma eliminates defects and minimizes process variation. It uses statistical tools to describe process capability. –Lean principles optimize the flow of a process and eliminates waste. –It takes both kinds of tools to truly optimize a process. © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 16

LeanSigma ® has a broad, team-based approach. © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 17 Lean tends to tackle end-to-end Processes… the Value Stream Map Lean uses a multi-functional team approach. It focuses on Speed, Quality, Efficiency & Standard Work. = Six Sigma = Lean Branch Apps CreditRiskLegal Doc Prep Fund Lending Value Stream

Lean improves a process. Six Sigma perfects it. Typically you streamline processes with Lean before improving capability with Six Sigma. Flow changes, standardization, and simplification through Lean may significantly improve existing process quality. Lean may completely eliminate a process that was causing an error. Removing waste through Lean makes issues and potential root- cause more apparent. © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 18

Business Process Re-engineering Six Sigma Lean LeanSigma ® High Performance Culture Process improvement becomes continuous improvement when embedded in the culture. © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 19 BPR: ‘80s-90s Streamlining Process Steps Mapping and Re- engineering workflow Objective: Productivity 6σ : ‘98-Curent Variation Reduction Data Driven Improvement Methodology and Decision Making YB, GB, BB, MBB, Champion Objective: Productivity and Quality Lean: ’05-Current Waste Reduction and Flow Infancy: Typically limited to BPR approach, lacking operational changes that adhere to Lean Principles Objective: End-to-End Lead Time Reduction, Cost, and Quality, Employee Engagement LeanSigma HPC: Evolving Flow, Abnormality Management, Discipline of Execution, Culture of Continuous Improvement Objective: End-to-End Lead Time Reduction, Cost, and Quality, Employee Engagement, Sustainable Competitive Advantage

Much of Lean will seem like “Applied Common Sense”. Time Principles –Establish Continuous Flow –Operate to Takt Time –Leverage a Pull System Smooth the Process –Demand vs. capacity –Routing standardization –Workforce management Jidoka –Root Cause Identification and Elimination (Abnormality Management) –Mistake-Proofing –Standard Operations © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 20 Principles of LeanSigma ® Just in Time Just in Time Jidoka Process Smoothing Just in Time Principles Jidoka Process Smoothing

Lean Sigma has six steps to optimize processes. 21