S Hoshin Kanri Harnessing the Collective Thinking of All Employees: to Deploy Policies that Operationalize Strategic Goals and to Operationalize the New Role of Procurement ISM – Dallas, TX October 8, 2015 Dennis M. Gawlik Faculty – Sustainable Operations The Pinchot University – Bainbridge Graduate Institute
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S
Hoshin Kanri
Harnessing the Collective Thinking of All Employees: to Deploy Policies that Operationalize Strategic Goals and
to Operationalize the New Role of Procurement
ISM – Dallas, TXOctober 8, 2015
Dennis M. GawlikFaculty – Sustainable Operations
The Pinchot University –Bainbridge Graduate Institute
Toyota’s 50 Year Vision
We will lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people.
Through our commitment to quality, constant innovation and respect for the planet, we aim to exceed expectations and be rewarded with a smile.
We will meet our challenging goals by engaging the talent and passion of people who believe there is always a better way.
Current Strategic Planning Process’ Ailing Symptoms
Does the business you work with experience any of these common business problems?
Many competing initiatives / goals / priorities that do not ever seem to get implemented?
Spending a great deal of time in unproductive meetings?
Slow to respond to changing customer needs / concerns?
Disengaged employees?
If yes, it may be due to the planning process your business uses.
Traditional Planning Process
Traditional Planning Process: Strategic planning is an organization’s process of
defining its long-term strategy, or direction, and making decisions on allocating its resources to pursue this strategy.
It involves setting goals, determining actions to achieve the goals, and mobilizing resources to execute the actions.
A strategy of Management by Objective (MBO) describes what ends/goals needs to be achieved.
Drawbacks of Traditional Planning Processes
• Ends (results) vs. Means (how)
• Reactive vs. Proactive
• Top-Down Driven
Hoshin KanriThe Toyota Way
Hoshin Kanri: In Japanese, (方針管理 ), Hoshin means "compass needle" or
"direction". Kanri means “control” or “management”. A method devised to capture and cement a strategic
goal(s) as well as flashes of insight about the future, and develop the means to bring these into reality.
This method aligns an organization toward accomplishing a single goal or a strategic plan in a way that creates organizational flexibility to adapt to marketplace conditions and changes for long-term success.
The Lean Leadership Development Model
3 Support Daily KaizenMake improvement a daily routine
2 Coach and Develop Others
1 Commit to Self DevelopmentLearn a systematic improvement pattern through repetition
TRUE NORTHVALUES
ChallengeKaizen MindGo and SeeTeamworkRespect
PD
CA
PD
CA
PD
CA
4 Create Vision and Align Goals
Align improvement goals vertically & horizontally
PD
CA
Coach others on theImprovement pattern
Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015, Figure 7-1. The Lean Leadership Development Model (we are focusing on step 4)
Hoshin Kanri is a Top-Down and Bottom-Up Learning Process
CompanyGoal
Brea
kdow
n of H
oshin
“Catc
hball
” acti
vity
Respect for people shown by contribution to company
business
Contributing to upper Hoshin
Company Hoshin
Division Hoshin
Department Hoshin
Individual Priority
Horizontal Alignment
On Job Development
Problem SolvingVertical Alignm
ent
Deploy the plan (Catchball)
Implement
the plan
Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015, Horizontal and Vertical Alignment
CEO, Group President, EVP Monthly
Who Frequency
Group VP,Operations
DirectorWeekly
Who Frequency
Plant Manager Daily
Who Frequency
Area Manager Every Shift
Who Frequency
Team Leader Hourly
Who FrequencyProduction Line
Production Area
Regional Operations
Plant Level
ExecMgmt.
Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015, Figure 7-11. Standard Meetings by Responsibility and Frequency
Frequency of Planning
What you see:Visual Metrics Aligned from Top to Bottom
to meet Annual Plan
HoshinVision
Floor Management Development System:Trim Group 1
Main KPIs
ProcessKPIs
Sub-KPIs
Safety Quality
Productivity Cost HR
. . . ..
Trim Shop
Assembly Division I
Plant-Wide
Trim 1 Trim 2 Trim 3 Trim 4
Door Trim Chassis Final
Stamp Body Paint Assembly
.. . . .x x xx x
.... ...... X
X X
X
ProblemX
.. ...
Shop KPIs
Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015, Visual Boards that Align top-level Plan to Shop Floor Metrics
S
HoshinVision
Floor Management Development System:Trim Group 1
Main KPIs
ProcessKPIs
Sub-KPIs
Safety Quality Productivity Cost HR. . . . .
. . . . .x
xx
xx
. . . . .. . . . . X
X X
X
ProblemX
. . . . .
Shop KPIs
Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015, Floor Management Development System Board
Attributes of Hoshin Kanri• Align shared
improvement goals both vertically and horizontally within the organization
• ‘Means’ Focused• Customer / Business
Centric• Builds Employee
Ownership• Execution at All Levels• Proactive / Flexible• Periodic Follow-Up &
Review• Reflection / Learning
Organization• Inclusive in Approach
Comparison between Management By Objective (MBO) and Hoshin
Kanri
Management by Objectives Hoshin KanriShort-Term, No Philosophy Long-Term, Strong Guiding Principles
Results Oriented Evaluation of Effort
Concerned with Results and Process with Focus on People Development
Top down Communication
Top down Direction Setting and Bottom-up flow of Information and means
Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015, Figure 7-7: Comparison between Management by Objectives and Hoshin Kanri
Why Use Hoshin Kanri? Difficult to track Progress to Plan 27% Organizational Goals Confusing 26% No Plan Continuity 18% Misinterpretation of Direction 12% Projects not Related to Goals 10%
Sample Size: 273 Surveys, 64 Returned
Pre-Existing Conditions Prior to Adopting Hoshin
Kanri
Sample Size: 273 Surveys, 64 Returned
Did not change with market
Had Process, were not effective
More than 5 Strategic Objectives
No Process if missed targets
No Steady Progress
(blank)
0 2 4 6 8 10 12 14 16 18
What Words Describe Hoshin Kanri?
Accou
ntabil
ity
Align
ment
Breakt
hroug
h
Catch
ball
Clarity
Commitm
ent
Coord
inatio
n
Engage
ment
Execut
ion
Flowdow
nFoc
us
Follow
-throu
gh
Intera
ctive
Proces
s
Resul
ts
Strate
gyStr
etch
Struct
ure
Sustai
nmen
t
Transf
ormati
on0
5
10
15
20
25
30
Engagement
Sample Size: 273 Surveys, 64 Returned
AlignmentExecution
Follow Through
Strategy
Critical Success Factorsof Using Hoshin Kanri
Sample Size: 273 Surveys, 64 Returned
Accou
ntabili
ty - Im
plemen
tating
Accou
ntability
- Reso
urcing
Breakt
hrough
Objecti
ves Other
Proces
s Focu
s
Resul
ts Foc
used
Strate
gic Metr
ics
Unders
tandin
g of V
ariab
les
(blan
k)0
2
4
6
8
10
12
14Key Factors
Results as Lean Evolves Depends on
PhilosophyTo
tal B
usin
ess
Resu
lts
from
Lea
n Tr
ansf
orm
atio
n
Starting out MaturingMaturity in Integrating Lean and Business Strategy
I.Apply ToolsThrough PDCA
II. Management Led Lean III. Aligned Continuous Improvement
Without Philosophy
With Philosophy
Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015, Figure 7-15. Results as Lean Evolves Depend on Philosophy
``
HoshinKanri
Daily Mgmt. (DM) with Kaizen
DM with no HK
Time
Perfo
rman
ce (K
PI)
HK with no DM
PD
CA
PD
CA
PD
CA
PD
CA
PD
CA
PD
CA
Relationship between Hoshin Kanri & Daily Management
- Both are essential - Maintain good balance
Jeffrey Liker: Developing Lean Leaders At All Levels; A Practical Guide: 2015, Figure 7-5. Hoshin Kanri and Daily Management work together for breakthroughs and sustainment
- Both are essential - Maintain good balance
Expected Return from Process Improvement Using Hoshin Kanri
Sample Size: 273 Surveys, 64 Returned
Imme-diate1 Month1 Quarter6 Months1 Year
Another Study: The Role of Procurement Has
Changed
Xchanging 2015; Global Procurement Study
Most Important KPIs:Management Still Focuses on Cost
Xchanging 2015; Global Procurement Study
Cost Factors
Procurement's Perception of Meeting
Targets
Xchanging 2015; Global Procurement Study
Procurement Operations Challenges
Xchanging 2015; Global Procurement Study
Top Procurement Operation’s Challenges
Xchanging 2015; Global Procurement Study
Xchanging 2015; Global Procurement Study
Using Hoshin Kanri can Assist Procurement Professionals
Why Procurement Should Use Hoshin Kanri?
Help Meet KPIs
Assist in Meeting Targets
Address Time Pressures
Increase Stakeholder Engagement
Address Talent Shortages
Engage employees
Conclusion• Over 70% of
Organizations conduct Annual Strategic Plans
• 68% Not Satisfied with the Process
• Hoshin Kanri Ties Strategy Development with Daily Management
• Hoshin Kanri Aids in Engagement, Alignment, Execution & Follow Through
• Expect to See Return Between 3 and 12 Months
What Questions Do You Have?
Stabilize & Standardize Flow (11 Steps):
1. Define Future State Value Stream2- 6. Implement Flow & Standard
Work7. Deploy Material Presentation
details8. Implement 5S & Workplace
Organization 9. Improve and Standardize Change
Over10.Establish and Develop Team
Leader11. Implement Layered Process Audits
Year 2 -5: Dana Operating System Implementation Roadmap
DOS Training Modules
and Standards
KPI’s, Problem Solving
Implement Flow
Process Improvement (JIT &
Jidoka)
Develop Best
Practices
Establish System
Pull
Stabilize
Cell
Number Completed
Qualified SME's Quality WIP
Floor Space Productivity
C/O time
75 40 62% 64% 36% 76% 68%
Globally 2009 DOS efforts delivered important results• Exceeded Conversion Cost target of $170M Reduction (2010 Target to reduce 5% from 2009 Actual)• Exceeded Reduction targets for Inventory cost & Days on Hand 2008
$915 M63 Days
2009$642 M38
Days
2010 Plan$542 M
($100M)32 Days
INV$DOH
Change($273 M)(25
Days)
2009 DOS Workshop Summary (average KPI Improvement %)
Figure 7-13. Some Results of Implementing the Dana Operating System.
Figure 7-14. Proposal A3 for Planning Dana Operating System Activities and Expected Results