Management Strategies For A Successful Lean Transformation

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Management Strategies For A Successful Lean Transformation November 2012 Speaker – John Weist

CNH Saskatoon Plant

INTRODUCTION

- Born and raised in Southern SK - Industrial Systems Engineering Degree - 4 years as Manufacturing Engineer - 4 years as WCM Manager - 1 year as ME / WCM Manager

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WHY AM I SPEAKING WITH YOU TODAY?

2010

2011

2012

Annual Savings $5.7 M $5.6 M $5.9 M % Trans. Cost 10.3% 9.0% 60

9.2% saskatoon Plant #11

50

Plant #6 40

Plant #4 Plant #9

30

Plant #3 Plant #2

20

Plant #8 Plant #1

10

Plant #7 0

2008

2009

2010

2011

2012

Plant #5

3

AGENDA

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•

Plant Information Product Line World Class Manufacturing (WCM) Management Strategies 1.) Senior Management Involvement 2.) Importance of KPI 3.) Goal Alignment 4.) Involve Everyone 5.) Time and Budget Investment 6.) Rigorously Audit 7.) Reward and Recognize Plant Results 4

Plant Information

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SASKATOON FACILITY

PLANT

LAND

632,000 SQUARE FT

156 ACRES

58,700 SQUARE M

63 HECTARE 6

FLEXI-COIL COMPANY HISTORY

•

The previous company, Flexi-Coil Ltd., was established in 1952.

•

During the 1990s Flexi-Coil became Canada's largest farm manufacturer.

•

Air Seeding and Tillage industry leader in North America and Australia. (air carts, drills and coil packer)

•

New Holland purchased 35% of Flexi-Coil in 1997

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1999 Merger of New Holland and CaseIH

•

The remaining shares of Flexi-Coil were acquired in January of 2000

7

FULLY INTEGRATED FACILITY

FAB

WELD

PAINT

ASSEMBLY

8

PLANT LAYOUT Planter, Header Assembly Lines East Powder Paint Line

Planter and Header Weld Stalls

Fabrication Equipment

West Powder Paint Line M66 Assembly

Tillage and Air Seeder Weld Stalls

Receiving / Warehouse

Air Seeder line Tillage Crating and Component Assembly

9

HEADCOUNT

10

PLANT SUMMARY – CUSTOMER DISTRIBUTION

Canada 21.9% CIS 1.8% China 2.6%

USA 70.6%

Africa 0.5%

S America 0.6%

Australia/NZ 2.0%

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Product Line

12

PRODUCTS

Planters

Air Carts

(17 models, 1 brand)

(4 models, 3 brands)

Hoe/Disk Drills (4 models, 3 brands)

13

PRODUCTS

Grain Heads (2 models, 1 brand)

Corn Heads (2 models, 2 brands)

Pickup Heads (2 models, 2 brands)

14

SOME ASSEMBLY REQUIRED!!

 This configuration requires ~175 hours of labor to setup

15

2010- 2012 NEW PRODUCT LAUNCHES

1260 Planter

16R30/18R20 Corn Header

580 Bu Air Cart

February 2010

April 2010

November 2010

Pickup Header

Pull-Type Sprayer

M66

January 2011

Dec 2011

December 2012 29

World Class Manufacturing

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WHAT IS WCM

- Corporate continuous improvement program focused on 3 objectives; 1.) employee involvement 2.) improving plant standards 3.) reducing wastes and losses - 10 technical pillars and 10 managerial pillars - focuses on the concept of “zero” and the sharing of best practices - 168 Plants involved in 16 different countries - Fundamentally changed how the Plant is managed - WCM is not a project, it is how we do business 18

Management Strategies

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THE RESOURCE STRUGGLE

Everyone has full time jobs where we work through the day to day things that allow us to get paid

Resources

We as Managers want more time for our employees to do continuous improvement type activities

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IT STARTS WITH SENIOR MANAGEMENT (TOP DOWN)

Senior Management including Plant Manager conduct Gemba project reviews twice per week  Reviews completed and planned action items for the week  Reviews road blocks and takes actions as required  A lack of activity cannot be hidden on the floor (we learned this the hard way) 21

UNDERSTAND AND SET KEY PERFORMANCE INDICATORS

- Set KPI’s / Lagging metrics (3-5 most critical metrics) Plant level followed by department specific - Set KAI’s / Leading metrics (30-50 supporting measures) Plant level followed by department specific **** Caution, several companies try to focus on everything, 10-20 KPI’s are too many **** **** KAI’s need to predict KPI success and must be able to be influenced by the group**** 22

UNDERSTAND AND SET KEY PERFORMANCE INDICATORS

- Set SMART metrics 1.) specific 2.) measurable 3.) attainable 4.) realistic 5.) timely - Set aggressive metrics 1.) 8% transformation cost savings per year 2.) zero breakdowns 3.) 90% reduction in cleaning times

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VISUALLY DISPLAY YOUR KPI’S / KAI’S (PLANT LEVEL)

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Create a Scorecard • • • •

Simple Highly visible to all employees Have the right metrics Must be easy for everyone to know whether they are winning or losing 24

VISUALLY DISPLAY YOUR KPI’S / KAI’S (PLANT LEVEL) KPI's # of breakdowns after step 3 in the model area MTBF MTTR OEE by Step 5 B/C of each step 1 B/C of each step 2 B/C of each step 3

May. 18

May. 25

Jun. 1

Jun. 8

Jun. 15

Jun. 22

Jun. 29

Jul. 6

0 1000 200 85

0 999 207.5 80.1%

3 417 289 80.1%

0 417 289 80.1%

0 417 289 80.1%

1 417 289 80.1%

1 548 202 77.2%

1 517 151 77.2%

0 548 151 77.2%

>1 >3 >1

KAI's # of SMPs in model areas % EWOs closed (counter measures implemented) # of MP Info in model areas Breakdown Maintenance Hours vs Non Breakdown hrs in Maint.

•

Target

Target May. 18 May. 25 Jun. 1 Jun. 8 Jun. 15 Jun. 22 Jun. 29 Jul. 6 240 367 367 367 367 367 398 398 398 100% 90.00% 91.60% 91.60% 91.60% 91.60% 91.30% 91.40% 92.80% 24 16 16 16 16 16 16 16 16 30% vs. 70% 12% vs 88% 11% vs 89% 11% vs 89% 11% vs 89% 11% vs 89% 11% vs 89% 11% vs 89% 11% vs 89%

Each pillar updates their specific KPIs every week • •

Displayed in Center of Excellence Quick visual for Senior Management to see overall progress and question KPI’s which are not being met

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VISUALLY DISPLAY YOUR KPI’S / KAI’S (DEPARTMENT SPECIFIC)

• Standardized supervisor communication boards (hourly staff)

• Process Monitor Boards for department specific metrics (salaried staff)

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VISUALLY DISPLAY YOUR KPI’S / KAI’S

Front Entrance Safety

Activity Boards

Kaizen Tracking Board

KPI Display Boards

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KPI / GOAL ALIGNMENT Objectives managed through central Performance Management System (EHRMS System)

Plant

Functional Area

Salaried Employee

Hourly Employee

Example of Goal Alignment from Plant Manager to the Hourly Employees: Plant Manager’s Goals provide the foundation for all other objectives. For 2012 they are: -Cost (Productivity & Spending) -Safety Area Manager’s Goals are derived from the Plant -Quality Manager’s goals. For 2012 they are: -Delivery & Inventory -Cost (Productivity & Spending) -WCM Production Supervisor’s Goals are derived from -Safety the Area Manager’s Goals and linked with their -Quality employee’s Goals: -HR -Spending -WCM Hourly Employee’s Goals are derived from the -Productivity Success Share Targets set across all plants: -Safety -Spending -Quality -Productivity -HR -Safety -WCM -Quality -WCM

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INVOLVE EVERYONE

- Our WCM Pillar Leaders are Managers, no questions asked, other Plants are not this way - All salaried staff are mandated to participate on a Pillar, its part of our “letter of offer” now

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INVOLVE EVERYONE (MAKE IT A PRIORITY)

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All pillars meet weekly (Using a kaizen journal)

WCM Weekly Meeting Times 7:00

Monday

Tuesday

Management Meeting

Management Meeting

Wednesday Management Meeting

Thursday

Friday

Management Meeting

Management Meeting

GEMBA Walk (8:00 – 9:00)

8:00

PM (7:30-8:30)

Pillar Leads, Plant Manager, Ops Manager

9:00

Focused Improvement Corporate (9:00-10:00)

Room F Logistics 9:00-10:00 Floor

10:00 Autonomous Activity 11:00

12:00

Room F (10:30-11:30)

WO (11:00-12:00) Corporate WCM Information Session 11:3012:30 MTC

WCM new-hire presentation EPM Room B 12:30-1:30

1:00

2:00 Quality Control Room A (2:30-3:30) 3:00

4:00

FI (1:00-2:00)

EEM Room B 1:00-2:00

Floor project reviews

PM (1:00-2:00)

Room B

Room F

CD East Plant

People

EEM (2:00-3:00)

Environment

Development

Room B (10:00-11:00)

Room F

Room B CD Fabrication

(2:00-4:00)

CD Pillar

Floor project reviews

Floor project reviews

Pillar Lead Meeting Corporate (2:00-3:00) Safety Room F 3:00-4:00 Floor project reviews

5:00

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INVOLVE EVERYONE (MAKE IT A PRIORITY)

Introduction of WCM into daily production meetings (2 Pillars present each day) - Tying WCM into everyday management - Support from production for roadblocks, brainstorming and countermeasures

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TIME AND BUDGET INVESTMENT (LAST 5 MONTHS) Quality Gate Central Team Conference Racine EEM / CD – Wichita

AM – Goodfield PD – Fargo / Wichita

PM – North America Pillar Leads

PD – Chrysler Academy

PD – WCM Audit Toledo

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TIME AND BUDGET INVESTMENT (SENIOR MANAGEMENT) BENCHMARKING Pillar Teams

CD

CNH - Zedelgem

CNH – San Mauro

CNH - Jesi

CNH – Grand Island

FI

FIAT - Cassino, Sevel

FIAT - Mirafiori

Iveco - Brescia

Iveco - Suzzara

FIAT - Mirafiori

Iveco - Brescia

Iveco - Suzzara

FIAT - Mirafiori

Iveco - Brescia

Iveco - Suzzara

AM

CNH - Fargo

WO

FIAT - Cassino, Sevel

PM

CNH - Fargo

QC

CNH – Grand Island

EEM/EPM

Vizient

PD

FIAT - Cassino, Sevel

Senior Management Benchmarking  SEVEL  Cassino  Suzzara  Brescia  Mirafiori Auto  Mirafiori FPT AM, PM, Minimum Material Handling, QGates, Bulky Items, Golden Zone, Kitting

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WCM AUDIT PROCESS AND RESULTS • Audit Process Split between shop floor projects and management presentations 10 technical pillars scored 0 – 5 10 managerial pillars scored 0 – 5 Total score is out of 100

Yamashina Audit April 2009 14 Points 2008 2009

WCM Starts Mar. 2008

Materazzo Audit Aug. 2010 35 Points 2010

Yamashina Audit Oct. 2010 37 Points

Mr. Emo Audit May 2011 41 Points 2011

Mr. Pino Audit Dec 2011 44 Points

Mr. Risi Audit May 2012 48 Points 2012

Bronze Audit Oct 2012

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REWARD AND RECOGNITION

Senior Management rewards 4 employees per week with small monetary reward for top kaizens

Employees presented their Kaizens and Suggestions to the Senior Management and attendees

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Plant Results

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RESULTS Employee Suggestion Program YTD Target: 9.0/person YTD Actual: 9.0/person

6,579 Suggestions YTD

14

12

10

8 Actual Target

6

4

2

0 2009

2010

2011

Projected 2012

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RESULTS (WCM INVOLVEMENT) 2011

ESP

Kaizen

Pillar Team

Project Team

1

1

1

1

2012

ESP

Kaizen

Pillar Team

Project Team

3

3

1

1

2013

Actual

ESP

Kaizen

Pillar Team

Project Team

6

4

1

1

Target

100% 80% 60% 40% 20% 0%

2009

2010

2011

2012

2013 38

RESULTS (SAFETY) KPI - Lost Time Injury Frequency

Frequency

LTIFI 2.1 1.8 1.5 1.2 0.9 0.6 0.3 0

96% Decrease in LTI Frequency since 2008

2008

2009

2010 LTI

2011

2012 YTD

Target

KPI – First Aid Injury Frequency

75% Decrease in First Aid Frequency since 2008

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RESULTS Plant Shipping – Customer Service Delivery

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VARIABLE COST PER HOUR

Variable CPH 58.00 56.00 54.00 52.00 50.00 48.00 46.00

2008

2009

2010

2011

2012

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COMPARISON TO OTHER PLANTS 60

50 saskatoon Plant #11

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BRONZE LEVEL Plant #6 Certification last week Plant #4 1st Plant in CNH Plant NA #9 Plant #3 3rd Plant CNH WW

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Plant #2 Plant #8

20

Plant #1 Plant #7 Plant #5

10

0

2008

2009

2010

2011

2012

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WHY WCM IS IMPORTANT TO SASKATOON

 Considerable improvements to Plant KPI’s (Safety, Quality, Productivity, Shipping)  Continue to empower employees (ESP, Employee Observation Form, Quick Kaizen, Plant Wide Data Collection)  Staying competitive globally requires constant growth and improvement

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QUESTIONS

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