Lunchtime Webinar Series: Effective Project Selection … Strategic Project... · Lunchtime Webinar Series: Effective Project Selection and Strategic ... Standardize HR procedures

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Lunchtime Webinar Series: Effective Project Selection and Strategic Alignment

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Operational Strategy Overview

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7 Step Strategy Planning Process

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Current Situation: BaltiColors is small, but rapidly

growing industrial paints company acting in Baltic states of Europe

Vision: “To become a major player (among top 5 by revenue) on European market of industrial paints”

Operating Model: Customer Intimacy

Current Challenge: to create a list of strategic initiatives and lower scale projects

Industrial Paints Case Study: BaltiColors, Inc.*

*This example has been created for illustration purposes only. Any resemblance to real products or companies is purely accidental.

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Step 2. 5-year Goals BaltiColors, Inc.

1. Sales Revenues 150 mln Euro/year

2. Weighted average cost 0.8 Euro/kg

3. Customer Satisfaction 8.5 on 1-10

4. Number of innovative projects

>12/year

5. Employee satisfaction index not

less than 30% on NPS scale

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Step 3. Annual Objectives The How Far

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Where Initiatives Fit Into The Process

Initiatives

Initiatives

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Business Transformation Architecture

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Step 4. High Level Initiatives

1. Value Creation Partners 1. Qualifying a premix supplier from Asia

2. Enabling Processes 1. Standardize HR procedures and policies

2. SAP implementation

3. NPI process redesign

3. Core Processes 1. OEE improvement program

2. Lean Six Sigma Deployment

4. Core offering 1. Margin optimization

2. Sales to Western Europe

3. Wood paint sales initiation

5. Brand Strategy 1. Developing brand strategy for Western Europe

6. Customer Experience 1. Become “best supplier in Europe”

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Top Initiatives’ KPIs and goals (subset)

“Best Supplier in Europe” initiative

1. Number of complains < 2/year/Customer

2. On Time in Full Delivery > 95%

3. Average Leadtime < 25 days

“Sales to Western Europe” Initiative

1. Sales to Arcelor Mittal (AM) >5000 tons/Year

2. Average Profits AM >0.5 Euro/kg

3. 3 new products approved by AM at line

“Margin optimization” Initiative

1. Average raw materials costs for top 20 products =

0.60 Euro

2. Stock levels < 4 weeks of Production

3. Cost of conversion 0,25 Euro/kg ex VAT

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Top Management Team Responsibilities

1 primary responsibility per initiative is recommended

Second level matrixes for each Top Management Team will include all initiatives where he/she has primary or secondary responsibilities

1.Qualify ing a premix supplier from Asia m l

2.Standardize HR procedures and Policies l m

3.SAP implementation l

4.NPI process redesign l m

5.OEE improvement program m m l

6.Lean Six Sigma Deployment m m l

7.Margin optimization m m m l m

8.Sales to Western Europe l m

9.Wood paint sales initiation l m

10.Developing brand Strategy for Western Europe l m m

11.“Best Supplier in Europe” l m

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1.Sales Revenues 150 mln. Euro/year

2.Weighted average cost 0.8 Euro/kg l Primary

3.Customer Satisfaction 8.5 on 1-10 m Secondary

4.Number of innovative projects >12/year

5.Employee satisfaction index not less than Х% on NPS

scale

Resources

Mike A

Top level initiatives

Strategicgoals

AnnualGoals KPI And Goals

for Initiatives

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Second Level

l Payment terms renegotiation m m l

l Alternative Suppliers l m

l LSS initative PMO l m

l R&D resource optimization l

l On-time raws supply for NPI l l m

l Load optimization l l m

l Troughput of premix ing department l l m

l Total Preventive maintenance l l l m

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l 1.Sales Revenues 75 mln. Euro/year

l 2.Weighted average cost 0.95 Euro/kg l Primary

l 3.Customer Satisfaction 7.5 on 1-10 m Secondary

l 4.Number of innovative projects >6/year

l

5.Employee satisfaction index not less than 20% on NPS

scale

Resources

Peder J

Second level initiatives

Annual goals

Top level initiatives KPI And Goals

for Initiatives

Level 2 Matrix for Peder J

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2nd Level Matrix For Peder J Top Initiatives, Top Matrix

1. NPI process redesign

2. OEE improvement program

3. Lean Six Sigma Deployment

4. Margin optimization

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2nd Level Matrix For Peder J Second Level Initiatives

1. Payment terms renegotiation

2. Alternative suppliers

3. LSS imitative PMO

4. R&D resource optimization

5. On-time raw supply for NPI

6. Load optimization

7. Throughput of premixing department

8. Total Preventive Maintenance

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KPIs and Goals for Second Level Initiatives (Sub-set)

Total Preventive Maintenance (TPM) 1. % PM covered>70%

2. On-time PM >75%

Throughput of premixing department 1. Daily throughput>90% of nominal

capacities

Load optimization 1. Load >75% of nominal volumes for final

product

2. Reduce number of Stock Keeping Units (SKU) by 5%

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Payment terms renegotiation m m l

Alternative Suppliers l m

LSS initative PMO l m

R&D resource optimization l

On-time raws supply for NPI l m

Load optimization l m

Troughput of premix ing department l m

Total Preventive maintenance l m

Ma

na

ge

r A

Ma

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r B

Ma

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r C

Ma

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r D

Ma

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1.Sales Revenues 75 mln. Euro/year

2.Weighted average cost 0.95 Euro/kg l Primary

3.Customer Satisfaction 7.5 on 1-10 m Secondary

4.Number of innovative projects >6/year

5.Employee satisfaction index not less than 20% on NPS

scale

Resources

Peder J

Second level initiatives

Annual goals

Top level initiatives KPI And Goals

for Initiatives

Peder J Team’s Responsibilities

1 Primary responsibility per initiative is recommended

Third level matrixes or action plans for each team member will be developed

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Actions and Projects Manager B

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Actions and Projects Type

Stabilize time to load up mixers Daily Management

Reduce Colour changeover times Project Kaizen

Reduce number of premix corrections Project - DMAIC

Test alternative tolling partner Daily Management

Actions and Project Types

1. Daily management

2. Project- «Just do it»

3. Project – Kaizen

4. Project - DMAIC

5. Project - DFSS

6. Project – Implement Process management

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Project Type

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If you DO have a Hoshin Kanri Process in place, select: • Projects impacting high priority initiatives

Or

• Projects working on bigger gaps between current performance and goals

If you DO NOT have Hoshin Kanri Process in place, • Choose projects with highest potential financials

…Even Better

• You might start thinking about strategy at least on your department level

…Or else

• You might end up with meaningless “for certification only” projects

Project Prioritization Approach

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Questions?