Case Study Business Performance & The 16 Habits of Lean Leaders
Client & Industry
Extrusion, anodization and power coating of aluminium profiles. Significant market leader in Europe, focused on the development, marketing and distribution of high quality aluminium systems for windows, doors, sliding elements, curtain walls, roof systems.
Size of Plant in case study
380 employees in powder coating plant and warehouse, 780 Employees in total on site. 220ths m2 manufacturing and warehouse facility, capable of generating 12ths m2 per month of powder coated aluminium profiles only.
Challenge: Project number 2
Increase the efficiency and effectiveness of the Sales & Operational Planning teams – S&OP, so as to increase production capacity realisation by 33%, whilst maintaining quality, reducing overtime hours by 50%, improving service levels of maintenance and increasing employee self-reliance and engagement.
Size of Problem
Current average monthly powder coating production at 9,000 m2. Target 12,000 m2 per month, an increase of 33%. Reduce overtime hours by 50%, thereby saving company over 125ths Euro per year.
Ensure that all planned machine and line maintenance is conducted according to the planned schedule. Improve quality levels of production. Improve on customer order realisation, from 94% to 97% on time in full.
Time line for project realisation: 9 months for 80% of all goals to be achieved, 14 months in total for full goal realisation.
Lean Safety Improvement Programme run in parallel with this project.
Consequences of Problem
Return on investment on machinery and plant currently at 87% of expected levels. Powder coating production fluctuates between 6,000 and 9,800 m2 per month. Planned maintenance of machines and production lines realised 30% on time to schedule.
Client order preferencing/jumping over and above the production plan occurring regularly. Ineffective production planning with many changes to the production plan each shift.
Frustration, lack of team work and blame culture prevalent in S&OP team. Without the right Organisational Culture at work, motivation levels are low with key employees. Demotivated employees leads to sub-optimal work and higher levels of employee rotation.
As you probably can imagine reading the goals for this project, the assignment was no easy task for anyone. What we should be aware of is that this particular plant and it’s management team had already been working on the Program for Continuous Improvement for over two years, attaining excellent results on prior improvement projects.
This assignment would also be a test of their self-reliance, especially challenging as it involved working with several departments. For political reasons, the Obeya methodology of running such complex projects was not chosen. Instead, the management team decided that they would run this project using the now well tested and proven A3 method.
The consulting, coaching, advisory and workshop events were more geared to the forth level of managing highly (Developed) engaged and self-reliant teams in line with the K. Blanchard Situational Leadership II model.
The “16 Habits of Lean Leaders Program for Continuous Improvement” covered several projects at the three Plants over a 4 year period. This specific Challenge was assigned an A3 Project methodology and was realised earlier then the time-frame given in the original goals.
Very often the root-cause of a S&OP team disfunction is not the process but the behaviour of the individuals and the team. The S&OP project is there to deliver financial value to the business. This project would save unnecessary processes and behaviours, bring in new revenue and improve productivity all the way to an increase in OEE.
So we are talking many millions of euro, or say 10% of yearly sales, just for starters. Later on, this would then bring in a reduction in OPEX and an increase in EBITDA of 5% increasing the value of the business by over 50 million euro over the next two years.
Here are some of the highlights of the operational results from this project.
1. On a like-for-like comparison, overtime went down by 27.5% during the first four months of the project.
2. The overall machine availability increased by 13.1% to 89.6% during the first four months of the project.
3. The planned maintenance and service of machines and production lines were delivered as per schedule from the visual management boards, within six months of the project commencement date.
4. The Production plan changes per shift went down from an average of 8 changes per shift to 2 per day (three shifts day).
5. Prior to commencing the project, around 8% of monthly planned production achieved 12ths m2 of coating aluminium profiles. By month 6 of the project, 45% of planned production was achieving the 12th m2 target.
6. Many additional improvements were made to the functioning of the plant. What was quite remarkable was to see how operations and management were able to strategically tackle the three categories of waste, namely muda, muri and mura.
It’s when management tackle the muri and mura and operational shop floor members take care of muda, that you know you finally have the team dealing with process and behaviour, according to their roles.
Senior management have many competing expectations and challenges. But that is just an excuse to say, I‘m too important and busy, don’t trouble me with your methods. But hang-on, give it a break. Maybe it’s worth reflecting on the flowing statement.
“To solve a business problem, or some process problem, before you do anything else, look for the whys and the root-causes from a behavioural perspective, giving specific attention to your part in the entire scheme of things”.
Build you organisation by allowing your people to focus on structured problem solving.
What Toyota focuses on is “Developing People through Problem Solving”, with a great deal of support mechanisms around the word “support”.
In the case of this plant, the support came form the 16 Habits.
I hope this case study has shown how this system works and why it works.
If you would like to know more, please contact me, Mark Forkun on: firstname.lastname@example.org