A Healthy Corporate Lifestyle Arno van Berkum Luncheon - PowerPoint PPT Presentation

Lean Principles and Practices: A Healthy Corporate Lifestyle Arno van Berkum Luncheon Presentation; September 25, 2014 The Institute of Internal Audit, Calgary 1

A Little Bit About Myself… • Certified Lean Six Sigma (Master) Black Belt; 11+ years of hands-on and coaching experience • Worked in variety of industries - Oil & Gas, Utilities, Healthcare, Manufacturing, Consumer Electronics • …and different parts of the world - North America, Europe and Asia • Married to an auditor, 2 sons 2

Our Conversation Today � Lean is an inherently simple, yet powerful methodology � Good habits make for healthy organizations � You already know some of this stuff! 3

Lean Methodology Was Born Out Of Necessity • Ford’s first attempt • Toyota’s rise from the ashes: do more with less • Adoption by automotive and others; now called Lean

Shorter Cycle Time Improves Capital Turns Capital Out Capital In Cycle Time 5

Shorten Cycle Time By Reducing Waste Travel Example: Security Walk to Correct Wait in clearance Wait in line gate Wait in line Spelling error line Print Boarding Pass Check luggage Board plane Value added activities are typically a small percentage (5% to 20%) of process cycle time. Traditional approaches tend to focus on accelerating value add; Lean on reducing waste. 6

To Eliminate Waste We Have To First Identify Value VALUE Who are your customers and what do they value? Map your end-to-end process, identifying which VALUE STREAM activities add value to the customer, and which do not FLOW Move towards continuous, single piece flow Provide solutions/ information/ services only PULL when it is required by the customer Create visual performance measures and PERFECTION drive continuous improvement 7

Waste – Activities that Customers Don’t Want To Pay For Moving parts between warehouses Oil that does not meet Too many parts ordered, refinery specification equipment idle 7+1 Wastes Oil that exceeds refinery Moving back and forth between specification (e.g. water content) work place and tool shed Producing in excess of Parts not available customer demand Waste identification requires different perspective on what good looks like, what’s feasible.

Where Does Waste Come From? � Processes are complex � Complexity leads to errors � Errors lead to increased controls (more complexity) � Fighting with internal processes at expense of focus on customer 9

The Benefits Of Lean � Improved responsiveness � More creativity Customer People � Improved quality � Less frustration � Optimized cost � More autonomy � Increased competitiveness � Empowerment Culture � Higher staff engagement & Business � Continuous improvement productivity � Customer focus � Improved agility 10

Project Example – Reduce Wellhead Facility Cycle Time The trigger – “there has to be a better way” Key Performance Indicator Baseline Target # Engineering designs Many 1 Engineering effort (hours) 1,200 None provided Engineering cycle time (days) 275 None provided Construction cycle time (days) 7 4 11

Step 1 – Standardize Engineering Design Kaizen I Standardize design based on design variables; define MOC process Asset 1 Asset 2 Asset 3 Marked up P&ID 12

Step 2 – Streamline Process Kaizen II Pre-fabricating modules prior to construction, concurrent execution Current State value stream map Future state: time-phased construction schedule 13

Step 3 – Implement, Monitor and Enhance New Process Results tracked and communicated via Scorecard Root-causes, solutions identified using tools such as Pareto analysis Improve scheduling process New piling depth guideline Integrate with Completions 14

The bottom line - $1.9 MM Cost Savings Additional benefits are increased flexibility, higher process awareness and less frustration. Key Performance Indicator Baseline Target After # Engineering designs Many 1 1 Engineering effort (hours) 1,200 None provided 500 Engineering cycle time (days) 275 None provided 35 Construction cycle time (days) 7 4 4 15

Lean Tools & Techniques Alone Are Not Enough It is easier to change processes than mindsets and habits. 16

Diet Analogy - Rapid Weight Loss, Then Rebounding � Focus on short term results � Underlying beliefs don’t change � Incentives don’t change � Old habits reappear � Inefficiencies creep back in 17

Lifestyle Change – New Thinking, Healthy Habits CUSTOMER VALUE Results True North Metrics Leadership Behaviors Focus On The Problems CLEAR PURPOSE - Enterprise Alignment Align Strategy Align Systems (Mgt, Financial, HE, IT) Align Performance SCIENTIFIC METHOD TO SEEK PERFECTION - Continuous Improvement Stabilize, standardize process Eliminate waste Fact-based decision making Integrate improvement with work RESPECT EVERY INDIVIDUAL - Cultural Enablers Involve everyone Ensure a safe environment Develop people Build teamwork 18

Traditional Leadership – Hierarchy Rules Autocratic Impatient All knowing Blaming Management By Controlling Objectives 19

Lean Leadership – Questions Are The Answer Coach Humility & Curiosity Communicator Facilitator Perseverance Focus on what and how Student 20

Closing Thoughts � Lean methodology and -tool set is powerful and relatively easy to grasp � Lasting results require a different perspective on business; and new habits � Deployed correctly, Lean will drive long term financial health, and a more positive work environment 21

Thank you! Questions? 22

Our Conversation Does Not Have To Stop Here Personal coordinates: • arno_vb@yahoo.com • ca.linkedin.com/in/arnovanberkum 23