Developing a Business Process Improvement Game Plan: An Interactive Workshop

K-Lean: A Program for Culture Change at Kellogg’s

Victor Munoz and Martin Stein

Food Manufacturing Summit

San Diego

January 31, 2011

martin.stein@comcast.net

Victor.Munoz@kellogg.com

Our Company

Sales 2009: more than USD 12 BillionPresent in: 180 countries8 Plants in Latin America

CONFIDENTIAL

Kellogg K-Lean

BACKGROUND

Corporate Offices: Battle Creek – Michigan, US

Sales 2009: more than USD $12 MM

Manufactures in 18 countries and marketed in more than 180

8 Plants in Latin America

4 Plants in México: Queretaro, Linares, Toluca, Mexicali

Challenges

• Global economic crisis

• Support commercial area, clients and consumer needs

• Improve value delivery

• Develop our people to manage the business in the future

• Create the future and deliver the results today

Culture Change

• Defining Goals, KPI’s and Metrics• Motivation of Organization to Accept Culture Change• Creating Standardized Training, Definitions and

Implementation Strategy• Building Internal Capability and Training Infrastructure• Program Operation Utilizing Automated System for

Reporting, Data Base on Best Practices and Sharing of Results on an Ongoing Basis

• Accelerating Cost Savings in Years 1 and 2 • Building the Business Case

Creating The Future

• It is not about the WHAT

• It is about the HOW

• Strategic decision:

®®

CONFIDENTIAL

Standard way to quantify GOOD

How to implement step by step?

With so many opportunities which one comes first?

TRACC

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ACTUAL SITUATION

Queretaro Plant: Started up April 2009 Special challenge in time in order to deliver results in short

time Pilot lines in Process and in Packing

Toluca / Linares Plants: Started up in May 2009 Toluca: pilot line Linares: Big Bang (Total Plant)

Mexicali Plant: Started up December 2009

The Kellogg K-Lean process and how they develop their people

CONFIDENTIAL

LEARNINGS

Company commitment

Communication, communication, communication

Openness to change. The hardest change is not on the Plant floor, it is with the middle management

EMPOWERMENT, EMPOWERMENT, EMPOWERMENT

The objective is not to get there, it is the JOURNEY

The Kellogg K-Lean process and how they develop their people

CONFIDENTIAL

ACHIEVEMENTS

Training with internal trainers

Querétaro 20 certified trainers 242 participants 50,000 hr/labor of training in 3 weeks

Linares 13 certified trainers 500 participants 150,000 hr/labor of training

Toluca 10 certified trainers 100 participants 30,000 hr/labor of training

Mexicali 7 certified trainers

The Kellogg K-Lean process and how they develop their people

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ACHIEVEMENTS

Common language, more “eyes” eliminating waste

Increasing throughput Packing capacity increase of 4%

annual

Dead times reduction (cleaning, fumigation) 40% time reduction during

fumigation 66% time reduction on dryer

clean up

Union Full support (People willing to arrive early for Shift Handover)

The Kellogg K-Lean process and how they develop their people

Creating The Future

• With the good results from previous years, how to keep improving….

• Where should we start?

• With so many options, what is it the right choice?

Envision World Class

Manage Change

CONFUSIONCONFUSION ANXIETYANXIETY RESISTANCERESISTANCE FRUSTRATIONFRUSTRATION TREADMILLTREADMILL

VISIONVISION SKILLSSKILLS INCENTIVESINCENTIVES RESOURCESRESOURCES ACTIONACTIONPLANPLAN

TRACC

• Quantitative Standards

• Step by step Implementation

• Systemic and sustainable approach

• Avoid shortcuts and reliance on traditional consulting approach

Implementation Roadmap

Learnings

• Company commitment

• Communication, communication, communication

• The hardest change is not on the plant floor, it is with the middle management

• Empowerment, empowerment, empowerment

• Coaching, coaching, coaching

People Development

• How to maintain K-lean path, time table, passion, etc.?

• How to maintain the knowledge?

• How ensure new people get on board and do not slow down the boat?

• What support the plant should have/need?

• How to create K-Lean bench?

People Development

• Training with internal trainers

People Development

• System leverage between plants

• Role evolution

• Additional work vs. transformation of current activities

• Link results with behavior and skills

• Proud of our products and workplace

Delivering Results

• Patience, patience, patience

Delivering Results

• Common language, more “eyes” eliminating waste– 43% waste reduction on corn line

• Increasing throughput

– Packing capacity increase of 4% annual

• Time reduction

– 40% during fumigation– 66% on dryer clean up– 60% on changeovers

• Union full support

Next Steps

• Consolidate and sharpen our manufacturing operating model

• Deployment in Venezuela, Ecuador, India and Australia

• Strengthen expansion of K-Lean beyond manufacturing

• Align our execution to the commercial function

• Become a talent powerhouse

Our Success History Is Just Beginning

• No incremental headcount

• Implementation vs. Transformation

• Leadership and Managing Change is the FOUNDATIONAL practice

• Mindsets and behaviors act on the speed and rhythm

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The Kellogg K-Lean TEAM

Business Case Study Calculator

• Current Plant Output per Year • ______________________________________• Current Dollar Value of Plant Output per Year per Ton • ______________________________________• Current Level of Operating Efficiency• ______________________________________• Projected Level of Operating Efficiency• ______________________________________• Change in Operating Efficiency• ______________________________________• Multiply Change Times Dollar Value Times Increased Plant Output• ______________________________________• Expected Benefits per Year • ______________________________________

Example

• Current Plant Output per Year • __________100 Million Tons____________________________• Current Dollar Value of Plant Output per Year per Ton • ___________$ 360,000___________________________• Current Level of Operating Efficiency• ____________88%__________________________• Projected Level of Operating Efficiency• ____________93%__________________________• Change in Operating Efficiency• ______________5%________________________• Multiply Change Times Dollar Value Times Increased Plant Output• ______________5 X 5 Million Tons________________________• Expected Benefits per Year • _______________$ 1.8 Million_______________________

CONTACT

• Martin Stein• Vice President• Competitive Capabilities International

• +1 617 755 1960

• mstein@ccint.net