Hoshin X-Matrix July 5, 2007
Posted by Lawrence Loucka in : Definitions, Lean, Lean Sigma , add a comment
Over a few days or weeks we build the strategic deployment message by documenting our priorities and plans. This document is known as the X-Matrix. Start by listing the business strategies on the left side of the X. Next comes deciding on the tactics to achieve these strategies and recording them in the Tactics block above the X.
There aught to be correlation between the tactics and the strategies, some stronger than others. A tactic may even address more than one strategy. The correlation table in the top left corner is meant to test the linkage between strategy and tactics. Have a strategy without a tactic?
Tactics imply process change and improvement. These are recorded in the Process block to the right of the X. Again correlation is tested between tactics and the targeted process changes in the correlation matrix above the process block to the north east of the X.
We record the process improvement metrics in the Results block located below the X. Again we have to look at the correlations between processes and improvement metrics. Metrics are tied back to strategy to close the loop in the correlation matrix in the bottom left.
To the right of the process block we list the people or teams involved and make another accountability correlation in the top right corner of the X-Matrix.
Now print the X-Matrix out on A3 or 11×17 paper and start shopping it around with the associates and leadership. Keep the plan up to date and in full public view.
Hoshin Kanri July 4, 2007
Posted by Lawrence Loucka in : Definitions, Lean, Lean Sigma, Reviews , 2comments
At long last we now have a number of recent readable guides for understanding and implementing policy deployment in your organization. My introduction to policy deployment was as a middle management participant feeding data and ideas into the cascading Catch Ball sessions we would have as new policies and strategies came rolling down the mountain. Over the years I’ve been looking for good reference materials to offer to others as they struggle to comprehend the power and simplicity of the methodology.
First on my summer reading list was Hoshin Kanri for the Lean Enterprise by Thomas Jackson. Tom Jackson explains how you can implement, identify and manage the critical relationships among your markets, design characteristics, production systems, and personnel to satisfy your customers and give you a competitive advantage. Developed in Japan and practiced by Toyota, US companies like Bank of America, Acuity Brands, HP, divisions of Raytheon, Honeywell, Texas Instruments and others have institutionalized this robust tool set with dramatic results. Here. Here.
Jackson’s book is really a workbook with many examples, forms, checklists (on an accompanying CD), team exercises, road map, and a case study. This would be a perfect self study guide for a motivated leadership team ready to embrace policy deployment and change management.
The basic premise behind the hoshin plan is that the best way to obtain the desired result is to ensure that all employees in the organization understand the long-range direction and that they are working according to a linked plan to make the vision a reality. To accomplish this are a number of tools starting with the Shewhart Cycle (Plan Do Check Act), affinity (house of quality) diagrams, the X-matrix lean "balanced scorecard", and A3 presentation/communication style.
Also known as Policy Deployment, this methodology was first documented by Yoji Akao in the late 1960’s and first seen in the West in the mid ’70’s at Japanese subsidiaries of western companies such as YHP, a division of HP. Quality Function Deployment , QFD is a related tool set useful in group decision making in product and service design, brand and product management. QFD transforms customer critical requirements into engineering characteristics.
Getting the Right Things Done by Pascal Dennis is much the same as the two other works presented here but makes its approach at a slightly higher altitude. This book chronicles the journey of the company and its President, an experienced lean leader who was hired several years ago to steer Atlas in the right direction. While Atlas had already applied some basic lean principles, it had not really connected the people and business processes so that the company could dramatically improve. Being good at point solutions doesn’t make a lean transformation. Atlas’ challenge was to find a a way of focusing and aligning the efforts of good people, and the new delivery system, something that would direct the tools to the right places. Enter strategy deployment. The parable continues with the ins and outs of deploying Hoshin.
Jackson’s book is more tactical, Dennis’ perhaps more strategic, although both are implementation guides. Pick one and give it a go!
Lee Hales March 9, 2007
Posted by Lawrence Loucka in : Consulting, Lean Sigma , add a comment
Today I had the good fortune to reacquaint myself with Lee Hales, president of High Performance Concepts and Richard Muther & Associates. Seems Lee had stumbled on Lean Sigma Supply Chain from a link in earlier post here on their simplified systematic layout planning. Many years ago I attended a facility layout workshop he and another gentleman ran. Ever since I’ve been a fan of Richard Muther’s logical approach to organizing the physical workplace. Need help with configuring you office, lab, factory then give Lee and his team a call.
Month-end Madness March 1, 2007
Posted by Lawrence Loucka in : Consulting, Lean, Lean Sigma, Supply Chain , add a comment
Do you have a “hockey stick”, where most of your bookings occur right at the end of the month, quarter, year? If you have a “hockey stick”, it is very hard to have consistently predictable revenues. Growth, profits and market value suffer when revenues are not predictable. Many companies experience 50% or more of their quarterly sales coming in during the last week or two of the quarter. The V.P. of Sales loses a lot of sleep, the CEO gets irritable and the rest of the executive staff loses confidence.
When orders look weak midway through the quarter, management applies pressure to “pull next quarter’s orders in”. The reps’ only choice may be to offer a discount to entice customers to cooperate. Whether or not they are successful in the current quarter, there is a reinforcing effect and customers learn to hold orders to the end of the quarter to get a lower price in the future. The net effects are a "hockey stick" and lower prices which can lead to significant profitability and cash flow concerns.
Vicious Cycle: With constant pressure to manage operating expenses the supply chain can end up reinforcing the month or quarter end splurge as supplies are expedited to meet the spike in demand, or replenish the stocks that shipped out all at once. Expediting or pulling in digs a hole creating future shortages; a self perpetuating cycle of feast and famine.
What to do? Change the systems - discounts, incentives, compensation, culture. A tall order but it can be done.
Safety Stock Calculations January 29, 2007
Posted by Lawrence Loucka in : Definitions, Lean Sigma, Logistics, Sigma, Supply Chain , 2commentsWhen I first learned inventory planning the math was rather simple. On top of the cycle stock (expected demand during lead time) I would add a percentage or a number of days. Here’s a web app that uses this percentage approach. If the lead time was 2 weeks I might carry 3 or 4. I soon learned that demand for some inventory items is more volatile than others, and some suppliers less reliable than others. I’d either have too much or not enough, and I’d never get in trouble for having a little too much. So I started using (average demand * lead time) + (one sided Z factor * demand standard deviation) for the target inventory level; a little better approach.
Here’s another formula from Inventory Management Review; Safety Stock: {Z * SQRT (Avg. Lead Time * Standard Deviation of Demand ^2 + Avg. Demand ^2 * Standard Deviation of Lead Time ^2}.
Over at QuickMBA ; To calculate the safety stock, first calculate the standard loss function, designated as L(z). This function is dependent on the values of the desired fill rate f, the demand μ and its standard deviation σ , the time between orders p, and the replenishment lead time l : L(z) = ( 1 - f ) µ p / σ ( p + l )1/2. Once L(z) is known, z can be found in a look-up table and the safety stock can be calculated by: Safety Stock = z σ ( p + l )1/2
Here’s a new one recently published by Kent Linford in the APICS Magazine Nov/Dec 2006. SS = √ [( σFE)2 x (LTI/FI)beta + ( σLT)2 x D2] x Z x (FI/OCI)beta
Where:
SS = safety stock
FE = forecast error
LT = lead time interval
FI = forecast interval
pick a beta between 0.5 and 0.7
D = average demand during lead time
Z = normal distribution service factor based on desired service level
OCI = order cycle interval
Dave Piasecki at InventoryOps.com uses; safety stock = (standard deviation)*(service factor)*(lead-time factor)*(order cycle factor)*(forecast-to-mean-demand factor)
Jon Schreibfeder has anoher approach.
Got any other versions?