What to Measure? Lean Initiative or Outcome of Lean Strategy...Lean Initiative or Outcome of Lean...
Transcript of What to Measure? Lean Initiative or Outcome of Lean Strategy...Lean Initiative or Outcome of Lean...
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What to Measure? Lean Initiative or
Outcome of Lean Strategy
with Jean Cunningham
Managing Times Press, 2003 Shingo Prize, 2004
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Productivity Press, 2007 Shingo Prize, 2008
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Wiley Publishing, 2008
Building LEAN Beyond Manufacturing
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Why Adopt Lean thinking? H
L H
Need to
justify Lean
Understands Lean as a way to achieve results
© 2017 by Jean Cunningham Consulting All rights reserved
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Lean Transformation Core Actions
Lean Transformation
Strategic Deployment
Value Stream
Management
Manage for Daily
Improvement (MDI)
Huddles Andon Boards Continuous Improvement Problem Solving
Kaizen Events
Flow: Cross-silo customer value
Active Daily Improvement (reduce waste)
Executive Responsibility, “True North”
Hoshin Kanri
Fixed Resources Break-even
Loss
Profit
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Five Sources of Lean Financial Value
What are they?
How are they different?
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Profit Model
Invested Capital • Fixed Assets • Inventory • Receivables
Fixed Resources Break-even Loss
Profit
Volume $
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Profit Model
Invested Capital • Fixed Assets • Inventory • Receivables
Break-even Loss
Profit
Accelerated Profit
Volume $
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Profit Model
1. Reduce Costs
Break-even Loss
Profit
Accelerated Profit
Volume $
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Profit Model
2. Create Capacity
Break-even Loss
Profit
Potential Profit
Volume $
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Profit Model
3. Increase Demand
Break-even Loss
Profit
Accelerated Profit
Volume $
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Profit Model
4. Improve Contribution to Profit Margin
Break-even Loss
Profit
Accelerated Profit
Volume $
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Contribution Margin
Revenue 10,000
Variable Costs 3,000
Contribution Margin 7,000
Margin % 70%
Contributors to Margin:
- Pricing
- Quantity of Materials
- Price of Materials
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5. Improve capital structure…for all the accountants out there!
Invested Capital • Fixed Assets • Inventory • Receivables
Fixed Resources Break-even Loss
Profit
Volume $
Profit Model
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Profit Model: with Traditional Outcome Linkage
Invested Capital • Fixed Assets • Inventory • Receivables
$
Fixed Resources Break-even
Profit
Volume
Sales
Operating Margin %
Working Capital
Return on Invested Capital
Loss
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Check Out the Spreadsheet!
Give me your card if you would like it
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Financial Impact Depends
• Commitment
• Investment
• Drive
• Senior leadership
• Current culture
• And so many more …
• Depth of the initiative(s)
• Breadth
• Speed of change
• Size of organization
• Financial situation
• Strategic focus
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Experimenting, Actions and Learning
Process Performance Outcomes
• Safety: Customers, Employees, Visitors
• Quality: Performs, Right the First Time,
• Delivery: Reduce lead time for everything!
• Cost: Spending on value creation
• Employee stability
• Vendor performance
• Customer delight
• Better than last year
• Financial security
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It is not about what to do.
It is about the environment you create for progress.
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What does this mean for your organization?
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Creating A Lean Culture
Support Change
Eliminate Waste
Optimize Information START
TODAY!
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• JCC founder and president
• Lean Accounting, Lean Business Management, Lean Office pioneer
• Original Thought Leader for Lean Accounting, Lean IT, Lean HR Summits
• Lean accounting lecturer for The Ohio State University, Masters of Business Operations Excellence program
Building LEAN Beyond Manufacturing
• Former CFO:
Lantech, Inc. Marshfield Door Systems
Association of Manufacturing Excellence Stiles Associates
• Board member: Lean Enterprise Institute Lean Education Advancement Foundation
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Contact
Jean Cunningham
Email: [email protected]
Phone: 224.688.3504
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What to Measure? Lean Initiative or
Outcome of Lean Strategy
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