Casspeat & Company
Global operations

Case study

Behavior Management
Why behaviors count beyond process kaizen
A national operation of a $40 B global company with a mixed portfolio has long been experiencing not only cultural and system disfunctions, originated at corporate level, but also some more fundamental deficiencies in the problem solving capacity at process and shop floor level.

After a period of intertia the Country MD responded to the alarming signals of waste and profit loss with launching a progam of management behavior and skills improvement and invited Casspeat to support his initiative. During the analysis we understood it was not so much the operational margin that gave reason for worry (the comparison to the benchmarks showed a healthy company) but rather the actual loss of opportunities that the MD had inferred accurately from a few soft indicators. Indeed it was the relatively low level problem solving and change management capability that marred the earning potential of the company and we estimated to cause a dissipation of $5 – 8 M from the bottom line. The company used to run ad hoc Kaizen events on its processes but these events, while productive in the short run individually, were disintegrating the larger system due to their rather competitive and isolated nature. All in all, as Casspeat revealed, there was a double fault with those events. They generated improvements that were not consolidated at system level and were not embedded in the management behaviors.

What we proposed and are implementing

After the analysis we submitted a proposal for the implementation of Casspeat’s behavior management system in a format carefully tailored to the company’s needs. Building on the logic of our general approach we elevated self-reflexion, problem identification plus solving and change management to the pinnacle of our program of embedding the capacity for continual improvement at the point of execution.

SR + PIS + CM = CIP

The farthest that an operations management company can go is to embed the capacity for continual improvement in its client’s organization. Similarly, any good company would desire this stage of its own thrust for excellence. Technology, processes and systems can never achieve a status of maximum added value contributor unless served by the right leadership and the right management behaviors. For this the triple capability of self-reflexion, problem identification plus solving and change management should so be rooted in the company culture that in fact the three become the highest valued assets of the organization. That is what our client in this case realized and instructed us to validate in preparation for the future.

Layout
Problem: inadequate layout kills
operative excellence and the CIP culture
An Eastern European site of a global automobile supplier experienced enormous delivery difficulties due to its ineffective plant layout.

It met a not entirely unusual problem of being forced to respond quickly to changes in its portfolio but put the new orders through the same layout and process configuration in lack of time and money to redesign the floor.

Many production initiatives fall prey to this phenomenon. After several years of change management efforts and disentangled projects that reached a certain degree of incremental improvements but not in the pace of the actual needs the company turned to Casspeat for help.

The aim we both agreed to was to create a design in which the actual material flows were able to give the best support to the different value streams. Creating that should not be very difficult at green field investments but it can prove to be a very serious challenge for on-going operations if major disruption of the processes were to be avoided.

Solution: ‘layouting’ needs planning before acting

It can happen that the progress to a new layout is not carefully prepared. The overall cultural patterns and management competences will tell a lot about the risks involved here. Sometimes a common understanding of the problems is missing in the first place. In other cases either the vision or the change management skills, or both are absent. In the present case we wanted to make sure that every stakeholder had the same understanding of the issue at stake. Non-compliance with legal, environmental and safety regulations; ineffective alignment of the different value streams obstructing productivity and lean initiatives; no space for future business in spite of the relatively big space occupied by waste related muda activities etc. made finally to the list of symptoms creating altogether the momentum of change. The activities then included the following. Change management workshops were provided to educate and motivate the stakeholders for effective action. The goals and metrics of the process were deployed very early, process champions were selected and transparency was secured both physically and in terms of phased goal attainment. The identification and classification of the existing value streams around which the actual material flows would be built happened promptly while the technological groups of families came to be defined, to be followed by the value stream maps of the future state.

Results and improvements

With a 12-week preparatory and 28-week implementation phase the engagement reached significant results:
  • Lead time improvement by 34%
  • WIP reduction by 25%
  • Productivity gains of 16%
  • OEE increase by 5%

Furniture
Problem: Low capacity utilization
One of the biggest suppliers of a global furniture company faced a situation of non-competitive cost level of its operations caused by low capacity utilization.

Despite the help received from the Lean department of the furniture conglomerate the low average throughput was not balanced by rigorous unit cost reduction. In people driven environments overall resource utilization by rule is always tied to management capabilities (system and managerial behaviors). Yet the external Lean experts kept pursuing mainly process level technical changes on a very theoretical application of the Lean approach. They did not succeed in drilling down to the root cause of the problem in the broken management environment. The gap between the goals of the company and the expectations at the point of executions were huge, literally two worlds existing side by side within the company, one in the minds of the upper management, the other in the real workings of the management system.

In order to cope with the impasse the management took a decision to bring Casspeat on board to achieve lasting changes in management capabilities and build specifically a problem solving company culture.

Solution: system redesign, increased utilization and behavior management

The first step was to establish the generic structure of the new management system on the basis of on Lean principles (Hoshin Kanri and PDCA). Goals and expectation were established at executive level, then broken and rolled down throughout the organization, standards were set to lock best practice and means to end thinking, and lastly the reporting system was rebuilt to make sure that meaningful feedback can be transferred back to top. With all the processes submitted to a systematic procedure of standardization common principles of process management were installed together with a coherent system of metrics. In-depth training and coaching were set on foot. The new layouts, Value Stream Maps, and 5S gave a solid ground for the management to follow the ratio of value-added time and waste. The conscious utilization of the PDCA cycles ensured the transparence of variances between expectations and the actual results. In about a year after project launch we achieved high level system utilization and together with consistent standardization it became the basis of the problem solving culture. Due to the size of the company and to the nature of the assignment the project took more 26 months to complete. This span of time signified the difference between mere process kaizens with technical objectives and a commitment to enduring changes in management capabilities to ensure endogenous continuous improvement.

Results and improvements in lean metrics

The general throughput increased by 15% across the company, the productivity increased by 25%, and average unit cost dropped by 11% by the completion of the project.

Crash
Problem: Extremely low gross margin vs permanently
increasing unit cost of operation (crisis management)
The client is a south European plant of a global Tier 1 supplier in the automotive business.

The mother company does not have a unified management system for the plants except for a reporting system on financials. Plants are strategically located in the vicinity of their customers to minimize cost and leverage delivery competences. In this particular case the operational cost of the plant on a new series of products whose weight in the portfolio reached 75% was 40% higher than the contracted sales price, an impossible situation by itself generated by the extreme and increasingly irrational demands of OEM’s on their supply chain. The plant tried to renegotiate the prices several times, but the automotive company did not bend. Competition was allegedly lurking in the background. To balance the EBIT with the import of a few profitable parts from sister plants was inadmissible due to high delivery cost. Outsourcing the core business was not an option either. And worst of all the crisis soon showed up in the quality of the site’ output, endangering future collaboration with the present customers.

Solution: a “crash” project followed by consolidation

Casspeat executed a two parts crisis management project. During the first part that we termed the “revolutionary” phase we analyzed all costs and based on the cost structure cut back on all resource utilization on a proportionate basis in the crisis area ending up with a cost structure similar to the original one, yet with significantly lower fixed costs and an almost tolerable level of variable costs. Overhead activities were mainly hidden by being transferred to sister plants and rented back on a fracture of the original expenses. (This was obviously allowed by previously unidentified waste in the sister plant’s transactional departments but the decision at least showed up further opportunities across the whole service chain.) Action plans were developed to enable the departments to stay within the strict limits of cost. Crisis management was implementing a unique and strict process in which cost was more important than efficiency. (Consequently, the process can slow down if the waste level is relatively low, which was not the case here.) The dramatic cut helped to attain the level of lowest possible losses in the problematic areas, and then an evolutionary part of the process started to build a new management system for the sake of general productivity increase and capability management. This latter phase was conducted like any normal system-based productivity improvement project, aiming for a working PDCA cycle managed system, an appropriate goals and expectations process in the roots, with incremental savings gained on the way ahead. Based on this the plant achieved higher profitability on the few less critical products. The most crucial part was the launch of this combined project when a real and credible vision about the future was to be provided to the employees in circumstances when not even the present customers promised to stay long. The Casspeat behavior management solutions helped to resolve the gravity of this issue through the team building workshops and on-the-floor coaching sessions that managed to effectively “sell” the vision and gained the cooperation of the people for the company.

Results and improvements in lean metrics

The plant was back to normal within 3.5 months by coming close to 0% EBIT which at least made the company manageable. Together we contained the epidemic of cultural erosion and despair, and started to build a Lean culture on the basis of stability.

TMP-OFC
Problem: failing TPM system
A manufacturing site of a global corporation producing electronics parts for automotive industry has been struggling with its main production line for some time.

Despite previous attempts to implement Lean TPM system the overall conditions and performance fluctuations clearly showed that the system is not functional. Due to the machine driven environment problems could be described mainly as a combination of very low machine availability and slow performance during uptime.

In order to manage the growing expectations to steeply enhance the throughput without further technological investments the site’s local management decided to start a TPM and OEE based project to stabilize the crucial equipment’s utilization. As early studies proved the line had been damaged by excessive downtime and change over times, inappropriate and non-transparent speed norms. Furthermore the lack of real performance metrics resulted in insufficient supervision and ineffective culture.

Solution: system reinforcement and on-the-floor coaching

Although the basics of Lean were not unknown to shop floor workers the project team faced a system utilization related problem and cultural deficits due to inappropriate former implementations. In order to rebuild the existing TPM system on the fly the job had to start with the revision of the OEE measurement mechanism (very sloppy at that time) also extending to the general revision of norms. Where a TPM system can definitely leak is the incoherent norm data base where the impact of the constantly changing product mix cannot be distinguished from operational wastes and losses. In such cases supervision and control lose their power due to severe non-transparency. Besides the revitalization of the TPM toolkit the main stress was on achieving a real behavior change in order to allow proper system utilization. A good amount of coaching accompanied the reimplementation of such LEAN tools as SMED, OEE, CIP points etc. By focusing on individual understanding and skills development these shop floor one-on-ones served the implementation of systems with considerable effect.

Results and improvements in lean metrics

The LEAN revitalization project took 16 weeks and ended with the following results:
  • OEE improvement by ~23% (from 56% to 67%)
  • (OEE) Availability growth by 56% from 44% to 69%
  • SMED: 80% of the change over types reached the single minute length
  • Preventive maintenance and 5S discipline improved by 20%

LEAN automotive system
Complexity vs. lean
The manufacturing site of a global automotive system supplier decided to establish one-piece flow in its final assembly department in order to eliminate huge buffer WIP and long lead times.

These symptoms clearly indicated the presence of a massive overproduction environment where deficit and surplus exist together, the fluctuation is high and overall performance transparency is low. In such an environment shop floor supervision has an almost impossible task. Though, with over 15,000 different SKU’s in the production such an extended lean change meant more than a pure implementation program. OPF usually creates radically different cultural and physical patterns in all dimensions of the shop floor.

The operational challenge

On the advice of Casspeat personnel the company decided to start building a pilot cell which proved to be crucial in the whole of the change management program. To define the relevant family groups along the value stream SKU and family matrices were worked out followed by the establishment of islands of final assembly to fit perfectly with the technological product families. The whole concept was then verified on the floor in large when the majority of operational phases were restructured and redesigned ushering in a new factory layout as well.

Implementation details

The lean initiative approved earlier by the client’s global management was supported by a 32-week Casspeat engagement managed in parallel at two major sites of the company. Some of lean tools implemented were
  • 5S, to create physical transparency and set norms for WIP,
  • Value stream based layout,
  • Leveling for resource planning (Heijunka),
  • Daily walk, to keep the 7 wastes transparent,
  • PDCA at the lowest levels of management,
  • Visual factory,
  • Local kaizen programs, to facilitate CIP culture.

Financial results

Already during the six months of the change management program both production sites achieved significant improvements:
  • General lead time reduction by 50% (from 16 days to 8 days)
  • Value stream optimizing (number of cells reduced from 9 to 5)
  • Production area reduced by 15%
  • WIP reduced by 60%
  • Productivity grew by 5%

LEAN office
Where the lack of office lean can be financially evaluated
With its over 250 customers and 600 suppliers an international cable manufacturer company faced serious challenges in aligning the different transactional flows efficiently and making them fully support the company’s added value creation.

Since the nature of its core business includes a more than 1.5-year-long lead time in total (from first contact to serial production), with its growing business volume and complexity the company’s transactional activities played an increasingly vital role in the business’ future.

Even with a relatively well managed manufacturing performance the ineffective administrative support caused permanent customer dissatisfaction especially against the engineering and prototype phases. A very low hit ratio (10-12%) of new business offers damaged the company overall prosperity and image.
In order to keep a healthy balance between serial production and project launch phases the whole transactional activity had to be reconsidered. The changes had to extend to purchasing, project engineering, customer relations and all relevant sales functions with the aim of turning them from an old fashioned silo culture into an organization based on multifunctional supply chain teams.

Multitasking and value stream orientation

The project team’s idea was to create cross-functional client service teams which can perfectly accommodate the existing value streams of the manufacturing area and are also able to optimize trade-offs within the total supply chain according to variable client priorities. Obviously this change meant an absolutely big cultural step in departments where the heads are usually conditioned only to serve one functional dimension. Empowerment, responsibility, problem solving, flexibility were the keywords the teams started to work around.

Results

4 months after establishing and training the cross-functional client service teams the following improvements were recorded:
  • Lead time reduction in business offer phase by 50% (from 10 days to 5 days)
  • Lead time reduction in prototype phase by 54% (from 28 days to 13 days)
  • Increased success ratio of new project offers: from 10-12% to a 21% in total.
  • Overhead productivity improvement by 8%
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