1. An Overview of IBM’s Lean Deployment Strategy
ISC SMART Lean
An Overview of IBM’s Lean Deployment Strategy
Rochester, MN

2. IBM Rochester Manufacturing Site
Overview
Year Plant Opened: 1956
875,000 Sq Ft of space
Largest IBM site under one contiguous roof
Type of Product Assembled:
Some key site information is listed above.

3. A Leader in Innovative Solutions
Power Systems
Power 750 Watson
Gaming Technology
Supercomputing
Worldwide Supply Chain
Global Customer Solution Center
Analytics and Software Development
Americas Finance Center of Excellence
Global Systems Software Support Center
Global Business and Technology Services
Cloud Computing
Power Systems
IBM Rochester employees play a vital role in the development and manufacture of Power Systems consisting of integrated business servers for small to mid-sized enterprises, as well as IBM’s powerful and technologically advanced line of UNIX servers. IBM now has one set of products that run Linux, AIX and i.
Gaming Technology
At IBM Rochester, hundreds of engineers played a significant role in developing the IBM chips that power Sony’s Playstation 3, Microsoft's Xbox and the Nintendo Wii. Recognized as important partners in preparing for the future of gaming, these talented teams continue to work closely with all three companies, adding new features and efficiencies that will advance the graphics, the community experience and the user-interface in future consoles.
Supercomputing
Developed and manufactured in Rochester are the Blue Gene/L, Blue Gene/P and supercomputers known as Roadrunner, Dawn and Sequoia and most recently Mira -- a 10-petaflop supercomputer that's four times faster than the current fastest computer, a 2.5-petaflop machine made in China. IBM made computing history with Roadrunner when it broke the petaflop barrier in 2008 and is on the path for exascale performance - one million trillion calculations in a single second by a single computer. One exaflop equals the combined performance of 50 million laptops enough to reach 1000 miles from the ground when stacked, weighing over 100,000 tons.
In 2009, IBM achieved the number one spot on the Top500 list for a record-breaking 10th time in a row. Roadrunner supercomputer has topped the list three times in a row and IBM has led in the top500 Green list.
IBM supercomputers serve the most diverse set of clients including governments, classified research, academia, weather, aerospace, design, financial services, health care, oil exploration and retail, among others.
Worldwide Supply Chain
Rochester’s Integrated Supply Chain (ISC) provides global leadership for a wide range of manufacturing services and products, and continues to meet client deliveries for Power Systems, Self-Checkout Retail Systems, as well as the world's fastest supercomputers. Working in disciplines that span the product life cycle ranging from product planning to customer fulfillment, this team is a world-class leader providing innovative product integration and solution delivery services to clients worldwide.
Global Customer Solution Center
The Global Customer Solution Center (GCSC) team operates with a client-centered focus and specializes in solution concept, design, prototyping, manufacturing and end-to-end delivery of custom-designed products ranging from kiosks, medical devices, complex system migration and multi-system product integration.
Analytics and Software Development
IBM Rochester’s software development teams are part of a globally integrated team leveraging IBM technologies from across the corporation and are strong contributors to emerging analytic software technology.
Americas Finance Center of Excellence
One of IBM's five worldwide Finance Planning Centers of Excellence (CoE) is located in Rochester, providing an excellent example of the site operating in support of IBM's globally integrated enterprise strategy. The CoE's financial analysts develop budgets, forecasts, and other financial analysis for all of IBM's business units.
Global Systems Software Support Center
The Rochester Support Center (a multiple SSPA award winner) is a state of the art support center that provides global, world class remote technical support. These specialists possess unique skills and collaborate to provide support for the HW and SW functionality of the IBM i, Power Systems, and their predecessors.
Global Business and Technology Services
Rochester’s Global Business Services and Global Technology Services provide services to all IBM platforms in addition to contract negotiation, service planning, business continuity and resilience services and application development. Rochester’s Integrated Technology Delivery team provides IT support to commercial client accounts, as well as internal IBM accounts, including the Rochester site, and will continue to support new growth businesses in global manufacturing, high performance computing development and life sciences.
Cloud Computing
Like analytics, cloud is one of the key growth plays for Power Systems. The IBM Power Systems platform offers a robust foundation for cloud computing, whether clients require a private cloud or are deploying a hybrid IT infrastructure connecting to cloud services provided by software as a service or infrastructure as a service provider. Developed in Rochester, the PowerVM hypervisor and IBM Systems Director VMControl™ server virtualization technologies are the basis for cloud infrastructure on the IBM Power Systems platform, enabling clients to consolidate, manage and provision virtual images for the cloud. Rochester employees have played a key role in shaping STG's Smart Cloud Portfolio, not only with the foundation technologies, like PowerVM, but also with integrated offerings like SmartCloud Entry, which helps clients deploy clouds faster. The latest delivery from this team, with its sister organization in Beijing, is the SmartCloud Entry offering delivered in 4Q In addition, Rochester employees are leading the Virtual Appliance work with our independent software vendors (ISVs) to enable our partners to rapidly deploy their solutions in a cloud environment with IBM.

4. KEY MESSAGE: 100 years of technology transformation and reinvention
KEY MESSAGE: 100 years of technology transformation and reinvention. Next century of innovation is about making the world work better.
TRANSITION: What is our iconic moment for the next century -- Watson

5. Incentive and Motivators for a Lean Transformation
What are some of the key challenges this domain experiences?
Customers expectations are increasing for more performance, cost and quality
Highly competitive marketplace coupled with the economic downturn in
Multiple new products introduced; varying complexity of design
Inefficient and non-adaptive processes for these products causes delays in prototyping and launch
Increasing cost to maintain facilities and infrastructure, with the constant business pressure to reduce operational costs
Mature workforce drives ‘passive’ behaviors
Declining employee morale and engagement
Source: “The Supply Chain of the Future”, IBM Study, 2010

6. If it doesn't add value, it is Waste!
What is Lean?
Defining Lean:
“A systematic approach to identifying and eliminating wastes (non-value-added activities) through continuous improvement by flowing the product at the pull of the customer, in pursuit of perfection”
Lean is a set of processes, philosophies and improvement techniques that eliminate waste to improve operational efficiency and financial performance of a business
Lean is a term that is adapted from the Toyota Production System (TPS) where Lean methods were formalize and popularized
If it doesn't add value, it is Waste!

7. Why do we want to improve the process?
Our customers require from us accuracy, speed, reliability, responsiveness, features and lower cost
To achieve these requirements, we have to constantly look at our processes to ensure we are meeting our goals in all these metrics
Nature of work -
Value Analysis
Value
Value - -
added work
added work
Non
Non - -
value
value - -
added work
added work
Customer value-added steps
require a “yes”
to all three questions:
Will the customer pay for it?
Is the product transformed?
Is it done right the first time?
Steps that are ESSENTIAL
Steps that are ESSENTIAL
Steps considered non
Steps considered non - -
because they physically
because they physically
essential to produce &
essential to produce &
change the product / service.
change the product / service.
deliver the product / service
deliver the product / service
to meet customer needs.
to meet customer needs.
The customer is willing to pay
The customer is willing to pay
{Description}
This screen shows bulleted text detailing why we want to improve our business processes. In addition, an illustration is shown diagramming work as composed of value-added work, non-value-added work, and value-enabling work.
{Transcript}
In order to satisfy customer demands, we have to constantly examine processes to ensure we are meeting our goals in all metrics. These metrics include accuracy, speed, reliability, responsiveness, features and lower cost.
The first part of process improvement is to identify the nature of work, or value analysis. An activity adds value if the customer cares about it and is willing to pay for it, if the product or service going through the activity changes physically, and if it is done right the first time.
Otherwise, it is non-value added or non-value enabled activity.
for them and they are done
for them and they are done
Customer is not willing to
Customer is not willing to
right the first time.
right the first time.
pay for step.
pay for step.
Steps not essential
to the customer, but
allowing value -
adding tasks to be
Value -
enabling work
done better / faster;
Needed for control
(Also called non-value add essential)

8. The Eight Lean Wastes, or, ‘DOWNTIME’
EMPLOYEE
TALENT NOT USED
Not using or being aware of people’s talent
Toxic effects of waste
Physical fatigue
Emotional fatigue
Increased frustration
Increased stress
Placement of blame
Decreased self-worth
Indecisiveness
VALUE ADDED WORK
5 to 30%
MOTION
Any wasted motion to pick up parts/ information. Also, wasted walking
DEFECTS
Repair or Rework
INVENTORY
Any excess storage or supply
OVERPRODUCTION
Producing more
than is needed
before it is needed
TRANSPORTATION
Movement of parts and materials or information
{Description}
This screen shows a circle subdivided into nine slices. Each of eight slices has the name and description of a type of waste. The ninth slice is labeled value-added work. In addition, bulleted text lists seven effects of waste.
{Transcript}
Applying the Lean philosophy will benefit an organization in several ways. Overall costs and inventory costs are lowered. Lead and cycle times are reduced. Efficiency and quality are improved. Communication between the organization and customers is improved. Physical work space and facility needs are reduced. And process flexibility is facilitated.
Take a few minutes to read through the eight Lean wastes and the descriptions for each kind of waste. The goal of a Lean improvement project is to identify and minimize, if not completely eliminate, these forms of Lean waste.
WAITING
NON-VALUE
ADDED PROCESSING
Any non-work time
waiting for tools,
supplies, parts, etc..
Doing more work than is necessary
Tip: The 8 wastes are – “D-O-W-N-T-I-M-E”

9. House of Lean- Concepts and Knowledge Elements
Lean Vision of Success
Continuous Learning
Organization
Capabilities & Skills
House of Lean Building Blocks
Deployment Leadership & VSM Management
Strategic Planning
Lean/Agile/LSS
Applied Learning
Hoshin
Planning
Information & Support
Systems
Visual Control Board
Decision
Support Systems
Simulation
Modeling
QFD
Pull Value
& Streamline E2E Flow
Pull Systems,
Kanban
Single Unit Flow
Process vs.
Results Feed the
Organization’s
Balanced Score
Card
POUS
Functional Layout
Structured
Employee Empowerment
Financial Excellence
Client Satisfaction
8D Problem Solving &
A3 Process Improvement
DMAIC &
DFSS
Process Excellence
Problem Solving
FMEA
Plan - Do -
Check -
Act
5S, Visual
Management
Standard Work
Kaizen Events
Basic Stability
Process Map, Value Add Analysis
Basic Knowledge
Leadership
Book Clubs & Workshops
Lean 101
Core Team Training
Science of Mfg.
(Getting Started)
Web Lectures
Mapping
Stream
Value
High Performing and Adaptive Culture
Transformational Leadership

10. Streamline E2E Flow: Optimizing Process
Process Flow
Lean Waste
Opportunity Analysis
Root Cause Analysis

11. Lean Foundational Competencies: 5S
Mission: To utilize the Lean team ingenuity along with Japanese 5s concepts to implement organization, orderliness, and cleanliness for establishing a highly functional, visual, state-of-the- art manufacturing facility
What are the goals and expectations?
We will succeed in building a world class visual factory and “set the bar” for the future
We will all take personal responsibility for our work areas
We will establish the Lean stability required as a foundation to our Lean transformation
MFG AREA

12. Lean Foundational Competencies: 5S
BEFORE
AFTER

13. Lean Foundational Competencies: 5S
BEFORE
AFTER

14. Smart Lean Success Measures
YEAR
2009
2010
2011
2012
Lean Certified Candidates
Under Plan
Improving
>90%
Lean Projects Implemented
Innovation Idea Implemented
Exceeded Plan
5S/Kaizen Implemented
Internal Process Improvements 14

15. Path Forward Change Paradigm
Path Forward* Approach to Lean Transformation
Business
Performance
Success
Process
Technology
People
Adaptive
Culture
Process
Excellence
Learning
Balanced Scorecard
Customer Value
Financial Excellence
Process Excellence
People Learning & Growth
Building Organizational
Capabilities for Business Transformation
What are the barriers to success?
Our time to market, quality and cost are not competitive
Our culture inhibits us from sustaining our Lean Transformation
What are our goals?
Improve the culture of the organization to become more adaptable
Improve transformational leadership across the organization to sustain our Lean Transformation
What are the business benefits we hope to realize?
Increase business performance through process excellence
Increase business results by improving client success and satisfaction
Improve the Culture so people feel good about coming to work here
What is our Team’s role?
Partner with the Senior Leadership Team to achieve our goals
Implement sustainable changes
Advocate the Lean transformation
“Teach your associates to teach themselves and in that way you will strengthen the entire organization” – IBM Founder, Thomas J. Watson, Sr. 1947
Transformational
Leadership
Path Forward Change Paradigm
Innovation and continuous improvement enabled through process excellence and high performing organization culture
*Path Forward is a global IBM business transformation initiative driven out of the corporate center for Learning and Development

16. Our Approach to a Successful Change Initiative*
Compelling Reason for Change
( Why leave where we are? )
Vision
( Where do we want to go? )
Transformational Leadership
( Who will take us there? )
Change Plan
( How will we get there? )
Enable advocates for change
( How will we enroll others to go where we want them to go? )
OCI©
Current State
OCI©
Preferred State
Path Forward Transformational Leadership Development
Lean Transformation Roadmap
Path Forward Transformation Teams
*The OCI is a registered Trademark of Human Synergistics International, Inc.- Dr. Robert Cooke
*Reference: Adapted form Dr . Marvin Washington

17. Why Culture?
LEAN Disciplines are 90% People, 10% Tools
Adapted from:

18. Organizational Culture Inventory – OCI® “Culture is everything” – Lou Gerstner (2002)
What is the OCI?
Most widely-used and thoroughly-researched tool for measuring organizational culture
Quantifying and managing organizational culture is critical
Brings an organization’s values “to life,”
Supports the implementation of its strategies
Promotes adaptation, goal attainment, and sustainability
How does the OCI work?
Provides organizations with a visual profile of their operating cultures (Current Culture) in terms of the behaviors that members believe are required to "fit in and meet expectations."
These behavioral norms have a significant impact on the organization’s ability to solve problems, adapt to change, and perform effectively
Why do an OCI?
Provides a reliable, valid, and true measure of culture—clearly distinguishing culture and climate as distinct yet interrelated organizational variables
Supporting programs designed for strategy implementation, employee engagement, organizational learning, quality and reliability, and/or customer service (a balanced scorecard approach)
Over the past 8 years,
the OCI has been used to
measure the current and
preferred states of the
STG/ISC Organizational
Cultures to identify the
key Levers for Change.
Significant culture and
business performance
improvement have been
realized.
Human Synergistics International ®, 2012

19. Why Transformational Leadership?
Individual and collective consideration
Attentive to employee and organizational needs
Coach and mentor, encourages and recognizes
Intellectual stimulation
Challenges assumptions, takes risks and solicits employees' ideas
Continuous learning and innovation is valued
Inspirational motivation
Challenge their employees with high standards
Communicate optimism about future goals
Role model through living the values of the organization
**Bass, B.M., Leadership and Performance, N.Y., Free Press (1985)

20. Path Forward to a Lean Transformation Illustration of a Transformational Leadership Roadmap8
Update Management System to Sustain the Change 5
Composite LSI Reports;
Transformational
Communication Module
Kaizen, Lean Certification, PDCA, SDWT, Gemba… 7
Identify Common Themes;
Implement Actions 3
Composite LI Reports;
Transformational
Communication Module 6
Develop Transformational
Leadership Strategies
(SLT and First Lines) 4 1
Life Styles Inventory (LSI)
(First Lines, Technical Leads);
1:1 Debriefs
Senior Leadership
Commitment 2
Leadership Impact (LI)
Assessment (SLT);
1:1 Debrief

21. Subject Matter Experts
Lean Competencies: Using the right tools to address business challenges
Kaizen Events
Simple Projects / Low Complexity
Very QUICK wins.
Low Analysis
Main Objectives
Train Organization
Drive Business Benefit
Lean Projects for Certification
Lean Wastes Identified
Opportunity Analysis
Moderate Complexity
Moderate degree of technical Analysis
Prioritized on Business Value
Moderate Time to complete
Lean
Sigma BB
High Complexity
Cross Functional
High Risk
Long Duration
Large Payback
HIGH COMPLEXITY LOW
LOW N° Employee Engagement HIGH
All Employees
Operator, Subcontractor,
Supplemental ,Team Lead,
Manager, Supervisor,
Technical, etc
Subject Matter Experts
Technician, Team Lead,
Manager, Supervisor, etc
Engineering
Any Engineering level,
Any Area (Quality, Industrial
Manufacturing, Testing, etc
{Description}
This screen shows a pyramid graphic listing the Lean techniques and tools for three levels – any employee, subject matter experts, and engineering.
{Transcript}
An effective Lean Enterprise utilizes the right process improvement tools and techniques to address its numerous business challenges. For very difficult business challenges where many functional groups are involved and processes are quite complex, the Lean Six Sigma methodology is an appropriate technique. Here several subject matter experts employ Lean process improvement and Six Sigma defect reduction techniques to transform their processes.
Lean improvement projects can varying in complexity and difficulty; although they tend to be less complex than Lean Six Sigma projects. Like Lean Six Sigma projects, Lean process improvement projects also follow a formal structured process and use fact-based problem solving techniques. Here statistical techniques are not heavily employed to analyze and improve processes. Lean improvement projects have proven to be very effective in transforming an organization’s core and support processes.
For business challenges where the need for employee buy-in is high and the complexity of the business challenge is relatively low, then the Kaizen event approach is a very effective process improvement technique. Here employees from the process area in question are trained and empowered to apply Lean tools and techniques to improve their processes. The employee buy-in and sustainability of Kaizen improvement projects is quite high.

22. Lean Certification Levels
GOLD LEVEL
Pass the Gold Level Certification Examination
Lead or Actively Participate in 5 Lean TACTICAL* Projects
Coach and Mentor; Conduct Workshops or Kaizen Events using 8 Step
Lead or Actively Participate in 3 STRATEGIC# Projects
Gold practitioners help to lead the Lean deployment across an organization
Silver practitioners
Lead Lean
Improvement
Project teams
SILVER LEVEL
Pass the Sliver Level Certification Examination
Lead or Actively Participate in 3 Lean TACTICAL* Projects
Coach and Mentor; Conduct Workshops or Kaizen Events using 8 Step
* - Deployment and application of lean principles, concepts and methods within a work cell, work group or value stream
{Description}
This screen shows three boxes representing the levels of Bonze certification.
{Transcript}
The Lean certification tiers are described here. There are three tiers of Lean certification for IBM practitioners. The first certification tier is the Bronze level certification. Here the Lean Bronze candidate is required to complete the Bronze classroom or virtual classroom training, pass the certification exam and successfully apply these Lean tools and techniques on an improvement project within their business unit.
The Silver level certification is the next certification tier. The Silver certification requires additional training in the areas of change facilitation and advanced Lean topics. The successful completion of additional Lean project work is required for Silver certification. Silver certified practitioners help coach and mentor Bronze practitioners.
The Lean Gold certification is the 3rd tier of Lean certification. At the Gold level additional training is required; particularly in the area of organization-wide Lean deployment competencies. At the Gold level, certified Lean practitioner direct plant-wide deployment activities. They provide training, coaching and mentoring to the Bronze and Silver practitioners.
BRONZE LEVEL
Complete LVC and Pass the Bronze Level Certification Examination
Lead or Actively Participate in 1 Lean TACTICAL* Project
Knowledge of 8 Step Structured Problem Solving
Bronze Level practitioners help lead Kaizen events
* - Deployment and application of lean principles, concepts and methods within a work cell, work group or value stream
# - Projects that demonstrate the transformation of a business or organization
Adapted from SME Lean Certification BOK

23. 2015 Smart Lean RoadMap to Excellence
Project Management
Financial Roll-Out
Cost-Ops / Lean Advocates
External Benchmarking 2x per quarter
Monthly 5S audit/Re-audit
&
Innovation on Job
Lean Certification Training
Transformational Leadership Training
Lean 101 Basics
Int/Ext
Benchmark
Review external best practice opportunities
5S/Kaizen
&
Innovation on Job
OCI Workshop
WW Best Practice Sharing
OCI®
Education 23

24. SMART Lean Contact Sathish Selvaraju Michael V. Testani
Office – Rochester, MN –
Michael V. Testani
Office – Endicott, NY –
Sreekanth Ramakrishnan
Office – Waltham, MA –

25. Thank You Gracias Obrigado Grazie Merci Danke {Description}
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Danke
{Description}
{Transcript}
Thank you for taking this Path Forward to Business Transformation Lean for Services course!
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