Case: Cultural Transformation

An American manufacturer of equipment for installation of cables and pipes had stalled their implementation of lean. Similar to many companies the implementation was limited to manufacturing. The family owned company was founded in the 1940s and still has the main facility in a small rural town in the American mid-west.
The company has about 1300 employees and a turnover of about $400 million US.
Suffering from late deliveries and a large inventory of parts and finished machines as well as an old fashioned production strategy, the company was in need of changing and improving their manufacturing to maintain their competitive edge.
Primarily engaging SAM to address issues in product development and to improve the flow of new products to manufacturing and the market, the company recognized SAM’s emphasis in a common mind-set and SAM’s implementation methodology. The need for the company was to make a more fundamental cultural change to address their issues.


Methodology

Change begins and ends at the top of an organization. With that in mind the management team together with SAM began to discuss and reflect on the company culture, including its history and heritage. It was a history of success including the mind-set and the way to do things, but over time it had not adjusted to reflect changes in the market place. The question at hand was what the essence in the company’s history was that had made it successful. The essence discovered in that work was combined with a vision of the needs to be fulfilled in order to establish future long term success. From the reflection and discussions a set of principles surfaced to support a definition for a common view, mind-set and strategy. The principles are now the foundation for the development of the company and reaches across all parts of the company, from manufacturing, sales and product development to support functions such as finance and human resources.

Mandatory training for all managers and leaders through reflections and discussions concerning the principles was carried out in groups. The discussions had a close connection to the real operation. Within the cross-functional discussion groups an atmosphere of affinity and understanding of the issues and challenges of other parts of the company evolved. The discussions alone have resulted in improvements in better flow, reduced inventory and better communication, as well as a new view of the opportunities that lie ahead.

SAM became deeply involved in the change process, by being present and available right in the middle of the everyday operation, as support and coach to individuals on all levels of the company.


Results

“As we sit here and discuss I realize how much has actually been improved during these last years”

– Culture shift from a mentality of “We in the work group against the rest of the organization” to understanding and appreciation of the common challenge and the goal of delivering good quality products on time to the customer – “We as a big team”
– Dismantled barriers between the different functions, working groups and organizational parts of the Company.
– Better improvement culture on all levels in the company. Understanding for what factors drive and sustain improvements in a Company.
– Changed and improved behavior among leaders and employees toward acting as support to the organization and each other.
– Better communication throughout the organization

Case: Product Development Process

An American manufacturer of machinery, made for installation of cables and pipes, approached SAM with the need to develop its products more efficiently. The company was founded in the 1940’s, and remains active in a small town in the Middle Western area. About 100 out of the 1300 employees worked within the R&D department.

There had been an increased market demand for new and updated products. In order to meet the customer demand as well as the increasing competition, the company needed to boost the productivity in the R&D department and shorten the lead-time. Since neither the adequate competence nor experience was found in the US, the client came to SAM.

Methodology

The project was executed in two different product segments. One product was technically advanced and complex. The other was simpler, but had more customized options regarding end configuration to the customer. By following the different steps in the development process, problems were handled as they arose. SAM participated in the respective projects and took active part in all of the processes that were included — from product design, fixture design and built, pre-production assembly to start of production.

The details that were handled can be categorized as follows:

  • Definition and clarification of the interfaces between different parts of the organization as well as understanding and improvement of the full development flow
  • Visualization of status and needs
  • Focus on real-time deviation handling
  • Leadership and communication

SAM guided and were deeply involved in the transformation, by participating on-site on a daily basis for implementation, support and coaching to individuals on all levels in the development process.

Results

  • Better cooperation between the different functions in the development process
  • 10-20 percent reduction of development lead time
  • 15 percent decrease of production lead time for prototypes
  • 20 percent increase of capacity for fixture built, which shortened the lead times
  • The total amount of test hours for new products was decreased by 25 percent, with an increase of man hours by merely three percent, leading to shortened lead times for product development as well as better product quality

 

Case: Modularization and Product Consolidation

A global multi billion dollar Swedish corporation needed assistance to introduce modularization to their product structure. The client had acquired numerous companies and needed to consolidate not only the operations, but also the products and the product structures. SAM was called in.
The project included 15 sub-projects, where modularization was considered to contribute to a better and simplified product structure, as well as faster development of new end variants. The sub-projects were both product specific and cross-functional across different product categories. All to support the potential for synergy effects in simplified supply chain operations and a more coherent product program, i.e. offering to the customers.

Methodology

The project was carried out at local development departments across the globe from Australia, to several countries in Europe as well as North and South America. Besides from training and coaching of designers and managers in modularization theory, a lot of effort was put on practical application.
Initially SAM engaged a substantial group of development managers to define development and design principles. The principles, turning into a common mind-set, would support the alignment of product development over the geographically spread organization.
SAM contributed with technical definitions, definition of design, user factors and design relations. Further more SAM did much of the analysis and data collection for the analysis in cooperation with the client. Each sub-project was unique and much time was spent with designers on site and out in the field where the equipment was used, in order to get a deeper understanding and getting closer to the actual user factors.

Results

  • Wide understanding of modularization amongst the designer teams.
  • Complete product structures for specific product families at the end of the Project.
  • The company was calculated to cut costs with 40 MEUR annually

The modular structure made it possible

One of the design teams received a request for a quote. Unfortunately the design team had focused their time on developing a machine of a different size and performance than requested in their new modular product family. However, the structures where defined and ready. Instead of the 6 months of the past to fulfil the request for the quote it took only 30 Days, thanks to the modular structure.

Case: Kanthal profitability analysis

Kanthal, a Swedish producer of metallic heating elements, currently owned by Sandvik, had profitability issues. Their bottom line result was positive, but the costs were increasing, resulting in a decreasing profitability over time. Production costs remained stable, but the indirect costs, such as sales and administration, were increasing. The KPI’s in effect did not give any insight into what and where countermeasures should be applied.

Which products were profitable, which customers were profitable, and why did the overhead costs increase? The Kanthal CEO engaged SAM to conduct an order-line profitability analysis, to gain a better understanding of their costs.

Execution

SAM conducted a series of interviews with employees to clarify their activities and how these related to the customers and products of Kanthal. Administration and sales related functions were of specific interest, since these costs had increased in relation to production costs, and were currently lumped together in one account as ”overhead”. By using the information gathered during the interviews, the overhead costs were allocated to the order rows to provide a better view of the profitability. An analysis of the data was then carried out and presented to the management.

Results

– Description of the profitability of customers and products which the management could use to create and prioritize countermeasures. Important insights include:
– 20% of the customers were responsible for 225% of the profit
– The largest customer, viewed as the most important one, was the most unprofitable
– Management introduced systems for automated order handling for selected customers resulting in turning these customers to profitable. The action did not interfere with the customer relations, but slightly improved them.
– The report and analysis was used as a tool in customer relations. The results were changed processes and behaviors of both customers and staff at Kanthal, further contributing to the profitability.

SAM and Harvard Business School

The work with Kanthal was done before Activity Based Costing (ABC) was a widespread method. When Harvard’s Robert S. Kaplan and H. Thomas Johnson, wrote the book ”Relevance Lost : The Rise and Fall of Management Accounting”, in which ABC is launched, the Kanthal case was included. This is the story how SAM came into contact with Robert and Thomas, which resulted in numerous collaborations. The Kanthal case is evidently still used at Harvard’s in their MBA program, and is one of their most widespread published cases.

 

Case: Modularization of Product And Organization

A product division at a global Swedish tech company with over 10,000 employees needed to change its mind-set. Due to shifting market demands cost, product variation and lead time had become increasingly important factors to consider. Each new customer had its own demands, leading to yet another product variant that required extensive development. The non-systematic development process resulted in long lead times and expensive product cost, even if many of the demands were similar and the products were all a part of a bigger, common system. Shortening the development lead time and cost, combined with satisfying customer demands, would be a considerable competitive advantage.

Methodology

A pre-study showed that there were opportunities to create a modular platform. Existing and future demands could be met by having a toolbox of modular components which could be re-used. The result would be less cost and reduced lead time, mainly  related to the development department.

Training and understanding for modularization and its development principles were implemented by arranging Principlay™ workshops. SAM worked with both the development and market departments in order to analyze the current and future customer demands. The analysis was the basis for the following step, in which one of the sub-systems was modularized. The organization was able to work practically with modularization during their daily work, resulting in an even deeper understanding of the modular mind-set.

The improved knowledge of  modularization spread through the organization and created needs for more Changes, that SAM facilitated. The development department was re-organized in order to support a modular product platform, new processes for development, test and verification were implemented and manufactring was re-shaped into a production strategy where all products were made on the same line. Now the transformation journey had started and could continue because of the mind-set, that had been cemented into organizational culture.

Results

  • The same customer need was met using  1/3 of the original number of parts
  • The company closed an important deal thanks to shortened development and delivery times, compared to the competitors’
  • Modular mind-set within the whole organizaition was achieved, not just within the development department

 

Case: Improving process line efficiency

In France SAM supported a 200 MEUR turnover food industry company to improve their efficency.  In one of their plants they had invested in a new production line. The investment was a necessity for growth in new product segments and attract new customers. But, the efficiency, i.e. the yield, of the line was poor. Still years after its installation, it did not produce to expectation. Improvements to the line had to be made soon, otherwise the owners was considering to close the unprofitable line. Production efficiency had to improve fast.

Execution

SAM was involved to increase the yield of the line. First and foremost SAM needed to bring back the production line to a normal situation in which people could breathe again and recover strength and motivation. Concurrently standards had to be set, documented and followed. To accomplish this SAM worked with the people at the production line to  document best practices and other habits as a base for improvement. SAM promoted more cooperation between the production line operators and other departments such as maintenance. By asking the right questions and by following up with key issues,  a learning culture started to flourish. Yhe new Culture and behavior  was soon reflected in the efficiency of the line.

To make the improvements sustainable and to ensure long term benefits, SAM realized that additional support was needed. The key was to strengthen the site’s culture through its managers. The company’s strategy already emphasized making people the core of the system, which is also the core of SAM’s Management by Means (MBM) framework. MBM coaching was conducted to form a company culture at the production site which aligned culture and principles of the company. Nowadays people are more keen to collaborate, to align the improvements for the benefits of the company, but also more confident to challenge the system to make Company long-term sustainable.

Results

– 30% increase in productivity within 6 months, reducing the waste in half. The line was now profitable
– Change of mindset aiming toward cooperation and learning.
– Change of culture in the plant considering management and operators behaviors.
– A better and more appreciated workplace with less stress.

 

Case: Process Transformation for Fiber Expansion

A telecom company with a turnover of tens of billon Swedish crowns had big issues with customer satisfaction expanding their fiber access to residential areas. Additionally, they were planning to multiply the delivery in order to gain strategic market shares.
The delivery precision was at 15 %, i.e. the company was not able to deliver on time. Parts of the delivery flow, made out of 1,500 people at 10 different sub-contractors, did not get along. The communication between the companies was lacking and handling of deviations was non-existent. The situation was pressed, not only for the management, but for all involved staff and sub-contractors.

Methodology

SAM was assigned to the project, having improved another flow within the company with great results. Customer insights analyses were combined with a substantial investigation of work performances, cultural analyses and flow mapping, which was transformed to an extensive visual flow description. During three months, SAM supported problem solving in the process together with the client staff. Conclusions were drawn in terms of how the flow and other methods should work and how a daily structure for deviation handling should be realized.
By making a tailor-made Principlay® simulation of the flow, leaders and key persons were involved in order to achieve an understanding and a common view of the delivery processes problems and solutions. Further, questions regarding expectations of the different parts of the organization were handled, as well as the common cross-functional mind-set in terms of principles, .
All employees were trained systematically in mind-set and methods with the aid of leaders and key persons. The overall flow was followed by an improvement group on management level including sub-contractors. Management was given insights of the performance through a special team called the Customer Viewpoint Improvement Group where issues were discussed and knowledge deepened.

Results

  • The company was able to deliver a 36 times higher volume, with substantially improved customer satisfaction. The work was nominated, and went to the finals, at ”Svenska Leanpriset” 2014
  • A strong feeling of affinity was developed throughout the whole flow, with involvement and an open atmosphere in order to bring up deviations immediately
  • Real time deviation handling, from 100 teams to top management. Correct resources were allocated from the right organizational level to the adequate place quickly, in order for goals to be achieved.
  • A changed leadership between both within parts of, as well as between the parts of the organization, and a drive and ability to continue the improvement work.

 

Case: Just-in-Time in Maintenance

A major Swedish producer of high-strength steel had issues sustaining adequate capacity in maintenance at the plant for continuous casting. The plant had been torn due to an increased quote of high-strength steel variants in the production and demanded much maintenance. The common perception was that the plant was under-staffed, needed more space for maintenance and was too out of date.

Methodology

SAM got involved in order to find an alternative solution. By carefully studying the operation and gaining a detailed understanding of the issues, a tailor-made training program was developed. The program involved employees and leaders within the whole maintenance flow. The aim was to support the employees with new principles and methods, training the staff in the daily operations. The introduction of a consumption driven flow, with pull buffers built on just-in-time theory, was key. In parallel, SAM worked with management and employees in order to establish a continuous improvement structure, according to MBM. All co-workers were involved to safeguard that the new way of working would continue to last long-term.

 

Results

  • The main goal of managing the increased need of maintenance was obtained quickly, and without any investments
  • Other departments were able to utilize more space, due to a reduced need of space in the maintenance plant
  • Lead times were generally shortened and tied up capital was reduced
  • Waste in terms of over-production was eliminated
  • The largest gain was probably in more satisfied employees, who were given more power and opportunities to influence their work situation, in addition to a clear sense of how their work affected the whole production flow

 

Case: Digital Planning Board

The personal meeting with visual information is  unbeatable in establishing trust and mutual understanding of what is actually happening in a production flow. In this case SAM’s customer , a large distributor of equipment with billions of dollar turnover utilized a manual physical planning board to visualize customer orders for this particular reason. However, the staff utilizing were struggling . Sales staff and other functions did not have the possibility to attend all meetings, due to the nature of their work, leading to the meetings subsiding and the breakdown in communication between the organizational functions. It became more difficult to ensure the delivery of products to their customers, at the right quality and at the right time.

Methodology

In the meetings in front of the planning board the planners, the shop staff, inventory staff, sales support and sales staff gathered to establish a common view of the status. Issues and tasks were prioritized together and decisions were made based on customer needs and internal capacity. What orders had to be rushed? Had a customer change his/her mind? Was a part missing that was needed to complete the build?
However, some of the staff were often geographically dispersed and could not attend the meeting in person. Much time was spent on keeping the systems and boards updated. The question was raised how to simplify for all needed personnel to attend the planning meetings without losing the common view and the effect of visualization.
One idea that was brought forward was to digitalize the board to enable participation from somewhere else, but in such a way that the visualization methodology, but in such a way that the visualization methodology and the direct, tactile approach to moving orders and seeing changes in real time was not lost. .
SAM supported the team members to solve the problem by developing a digital version of the planning board, and supported the team utilizing the board by continuously developing and improving it on site. The tool that was created was based on well-known, established methods. Hence, it was embraced by all participants from the start.

 

Results

– A digital planning board:

  • based on existing processes and needs
  • allowing everyone, independent of geographical presence, to be involved
  • sustaining the direct, tactile planning approach
  • connected to the IT infrastructure to minimize administration

– Improved presence and involvement in the planning necessary for increased productivity with sustained precision and efficiency

Case: Planning of Durability Testing

SAM was assigned to improve the flow from R&D at a truck manufacturer. The R&D department had 1,000 employees and the company produced 70,000 trucks annually. SAM sensed that one of the design teams was under a lot of stress, with problems to make deadlines due to project overload and too many checklists to follow. The expectations on the group were high, as the team was responsible for meeting the increasingly extensive legal requirements.

Methodology

SAM supported the design team in understanding the true needs in their product development operation. It turned out that the team was working towards project goals that were more or less fictitious. By interviewing the employees and reflecting upon demand driven flow, the group realized that the real need was to have the developed parts on site by the time that the mandatory durability test that each part needed to pass took place.
Further, SAM and the design team realized that the planning of the durability tests was inadequate. The current goal was to guarantee full utilization of the test cells, leading to over-scheduled production. Yet, the planning of the test cells was uneven and parts were missing for tests, as the different design teams were not working towards the same test deadlines.
The flow was evened out by creating a visual planning board, where a new test carrier went into the test cells with a tact time of two weeks. The test carrier was symbolized by a card that was moved forward on a whiteboard, towards the test cells, every other week.

Results

  • Increased productivity in the design department, thus major competitive advantage compared to the competitors when adapting to new legal requirements
  • Improved utilization in the test cells
  • A common view of the whole design organization
  • The organization went from working in individual silos to having a common aim and holistic mind-set
  • Tacted production in testing
  • Each test carrier got the needed attention in order to start on time
  • A sense of calm and control in the design work
  • The results were spread in the rest of the R&D department