Making a Business Case for Lean (1 Day Class)
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BACKGROUND
Executives have been asking about the return on investment of lean programs forever. The lean community answers with “this is the wrong kind of question.” This may be true, but lean experts have not been very good at showing the business benefits of lean, beyond arguing that continuous improvement pays.
The ROI of a lean program doesn't make sense because lean is not a project-based cost-cutting method. It would be like asking for a ROI on sports coaching. Lean is a management practice, and in this sense, the only way to calculate ROI is to assess the growing value of the company. What we’ve learned is that CEOs who adopt lean multiply their organization’s value by a significant factor within a 4-5 years.
A spectacular increase in company value is possible when the executive team with the involvement of the CEO is able to extrapolate learning from applying lean at the operator level to developing the lean business model of the company, and, vice versa, start from addressing company business issues to specify major challenges, then shop-floor kaizen. The best learning occurs in the constant shuffling between high-level business objectives and shop floor practice.
Based on his experience of working closely with CEOs and executive teams, Michael Ballé details the business case for lean by showing how to link P&L and budget with lean activities on the shop floor or engineering office. This workshop is based on practical case studies of industrial companies that have been practicing lean for a number of years. It showcases both successes and pitfalls, and highlights the teamwork needed between lean experts and top executives.
EXPECTED OUTCOME
The key to a successful lean effort is to correctly define business challenges and address them through continuous value-stream improvement activities. Workshop participants will enrich their understanding of the link between P&L and their lean activities by studying company cases wherein lean is the strategy.
OUTLINE
- Introduction - Understand the ‘ROI for lean’ and why lean is radically different from any other productivity improvement approach
- The key to lean success - Link budget results and kaizen by formulating the right challenges, activities, and kaizen targets.
- Sales – Identify three activities to promote sales growth by better understanding value:
- Customer complaints
- Customer lead-time
- New product takt time
Exercise: What is your plan to support sales growth? What are you learning through its
implementation?
- Cash - Reduce lead time to improve cash:
- Identify value streams,
- Create and accelerate flow
Exercise: What is your plan to accelerate flow? What are you learning about your company's
processes?
- Costs - Introduce pull systems to stabilize work cycles, reveal waste, and better manage costs by isolating variation by developing standards and kaizen.
Exercise: What is your plan to implement pull and involve operators in the systematic
reduction of waste?
- Capital expenditure - Fundamentally improve your company by making “lean investments” that will support the next phase of growth. Change management's mind on the nature of investments in terms of shorter and more flexible value streams.
Exercise: What is your investment plan and what are you learning about your future value
streams? If you want to be very good at a few things, what should they be?
- The secret to lean success is PDCA at the executive level linked to the PDCA at operator level.
For group discussion and exercises, we will study two cases of organizational growth linked to the lean transformation:
- One case study presents a medium-size construction company where the CEO has grown the value of the firm by 10 in five years applying lean thinking
- The other will look into the results achieved by a very large global company that chose lean as its business strategy.
By working on these cases, business leaders will get a grasp of how to use lean practice to leverage top-line, cash, and bottom-line results as well as building the company for the future.
WHO SHOULD ATTEND
This workshop is primarily intended for CI Managers who want to learn how to "speak with the CEO". The difficulty and frustration many lean experts encounter is grabbing senior executives’ attention, mostly because they don't speak the same language. By learning to phrase lean initiatives in business terms, one can greatly improve one’s effectiveness and influence in the firm. In the course of the workshop we will discuss several real-life experiences of getting the lean point across to financial managers.
This workshop would also be very beneficial for business unit managers who need to connect their lean efforts to business results.
Price: $800.00 ($700.00 if the participant is taking 2 or more workshops at one location)
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