Engineering Management MSE507 Lean Manufacturing "There is only one boss: the customer. And he can fire everybody in the company, from the chairman on.
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Engineering Management MSE507 Lean Manufacturing "There is only one boss: the customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else." Samuel M Walton Chapter 1 Customer Value
Key Point Value is defined by the customer Whenever there is a product for a customer, there is a value stream. The Challenge lies in seeing it…
Module Goals Know Your external customers Your internal customers Feel Capable of talking to your customer Do Identify what your customers value Measure the delivery of value to your customers
Results Profitable Sales Knowing what your customers value enables you to… …build loyalty - penetrate deeper, retain more longer …win new accounts - keep them …make transactions easier, faster …add services, support - higher value …develop new products, services - higher value …enhance marketing programs …help customers succeed Delivery Quality Cost Control Design Functional Silos Voice of The Customer Profitable Sales Growth Customer Satisfaction
What do Customers Value? The technical performance or quality of a product is no longer the primary determinant of customer value. Customers evaluate other "value factors“ such as: Delivery Total cost of ownership Data and information Value or solution bundles Business expertise What does your customer value? More importantly, what are you doing about it?
1.Overproduction - The primary waste Making parts faster than is required Excess Inventory Time wasted, that could be used to make product that is required 2.Waiting An operator waiting for a long machine cycle to end 3.Transportation Moving parts and products does not add value - it just adds cost
7 Types of Waste 4.Unnecessary Processing Booking work into a store and then having to book it back out again to use. 5.Inventory There is a cost to the Company for carry inventory There is always the risk it can become obsolete It covers up other inefficiencies e.g. Long set-up times
7 Types of Waste 6.Unnecessary Motion Any motion of a person that does not add value Operators / Setters looking for tooling 7.Correction Reworking defective materials Things to remember about waste It is a symptom rather than a root cause of the problem It points to problems within the system, at both process and value stream levels We need to find and address the causes of the waste
Basic Roadmap Understand and Define Entire Value Streams Deploy Key Business Objectives - Measure and target (6 metrics) - Align and involve all employees - Develop and motivate Define, Measure, Analyze, Improve Identify root causes, prioritize, eliminate waste, make things flow and pulled by customers Control -Sustain Improvement -Drive Towards Perfection Identify Customer Value Vision (Strategic Business Plan) Continuous Improvement (DMAIC)
Cautions Never, ever assume that… You already know what the customer wants. Marketing and sales people “know the customer” Unless they have a defined program of regularly asking the customer what they want. Customer’s requirements are the same as always They will change over time We need to monitor and track You understand why customers do what they do. What drives them? Ask customers directly; do not assume you know.
Quiz Time Do you… Have management commitment and involvement? Have a defined list of your customers? Ask your customers what they value? Ask your customers the importance of those values? Ask your customers how you perform? Map the flow of value to the customer? Measure your performance in delivering value? Know how your performance affects the company? Know your competitive advantage? Use this information to prioritize OpEx projects? Have a defined program for continuous improvement?
Basic Plan Identify your customers Ask the customers what they value Map your value stream Measure the delivery of value Make continuous improvements
Identify Your Customers External Consumers Distributors OEMs Internal Next process Shipping Management Inspection/audit Other Employees Suppliers
Be Customer Focused Make a list of all customers Put the list in order of priority to your process The most important customer is often the next process Post the list in the work area Be aware of all customers
Ask the Customer Ask Yourself 3 Questions 1. What do you want to know? 2. Who do you want to know it from? 3. What are you going to do with the information? If you cannot answer question 3, you should not bother asking questions 1 and 2.
Ask the Customer General Questions What is most important to them? What would ‘make their day’? What would utterly delight them? What would differentiate you from the competition? Use open-ended questions.
Ask the Customer Standard Questions How important to you is [OTD]? What do you mean by [OTD]? How do we perform on [OTD]? What do you do if we don’t perform? What impact does non-performance have on you? Ask for each factor of interest to you. Use a scale of 1 (low) to 9 (high)
Ask the Customer Process Openly state your purpose for asking questions Do more listening than talking Do not be defensive, take criticism graciously Probe for explanations; ask “why” five times Do not try to ‘sell’ the customer, just gather data
Class Exercise - Customer Interview Pair up Scenario 1 (two minutes) Person A (customer) – is interested in a new car Person B – find out what Person A values in a new car Scenario 2 (two minutes) Person B (customer) – is selecting a restaurant to eat at Person A – find out what Person B values in a restaurant Group discussion Any surprises? Any difficulties?
1 2 3 4 SPECIFY VALUE IDENTIFY THE VALUE STREAM FLOW CONVERT PUSH TO PULL Lean Manufacturing Cycle Step 5 – CONTINUOUSLY IMPROVE Getting value to flow faster exposes hidden muda in the value stream. The harder you pull, more obsticles to flow are revealed so they can be removed.
Homework Assignment 1. What is considered as value in the eyes of customers. Why? 2. What are the seven types of waste? Give examples for each one. Read Lean Thinking Chapter 2 The Value Stream Pages 37-49