The leader’s job is to drive the bus;

• Get the right people on the bus
• Get the wrong people off the bus
• Make sure the right people are in the right seats
• Know where the bus is going
• Know when to look in the mirror
• Be committed to getting the bus to its destination
• Provide resources to ensure trip’s success

• Supply Chain Organization: Is there an integrated approach to the supply chain and inventory decisions, or functional silos? The less integrated, the more inventory problems (shortages or overages) are likely to occur.
• Supply Chain Network Design: The greater the number of stocking points, all things being equal, the higher the level of inventory. The longer the supply chain (e.g., goods produced offshore), the higher the level of inventory.
• Customer Service Policies: A company’s strategies and goals related to customer service, both generally and at an A, B, C category level, will greatly impact inventories.
• Safety Stock Policies: Relatedly, how aggressive or not a company wants to be with safety levels, and how frequently a company revisits safety stock assumptions and SKU-level targets, are key variables.
• Degrees of Freedom for Inventory Decisions: The more individuals that have the ability to add inventory into the supply chain, the higher the levels are likely to be.
• Management of Trade-Offs: Company specific decisions about the traditional inventory, transportation, and unit cost trade-offs. The lowest total cost will usually have higher inventories than the lowest inventory cost option.
• Forecast Accuracy: The greater the level of forecast inaccuracy, generally the lower levels of total inventory.
• Demand Variability: Highly dynamic demand in general leads to greater inventory levels to maintain customer service targets.
• Supply Variability: The more variable the supply, the more buffer inventory that needs to be held. Obviously, this is a potential issue with offshoring. In general, variability of supply is worse than a long supply chain in terms of the impact on inventory.
• SKU Counts: The higher the number of SKUs, the higher the level of inventory will generally be for the same dollars in sales.
• Total Cycle Times: The faster the cycle times, the lower levels of inventory required. Procter & Gamble, for instance, is trying to make its factory more flexible, with much quicker set-up times, in part to reduce inventory levels.
• Level of Supply Chain Collaboration: The more integrated a company is with suppliers and customers to jointly manage inventories, the lower inventories are likely to be.
• Vendor Relationships: Companies that have supplier-owned inventory programs, or just-in-time supplier logistics centers, will have lower total inventories on the raw materials/components side.
• Level of Supply Chain Visibility: The better visibility a company has to its network-wide inventory, the lower its total inventory should be. This is part of the promised potential of RFID.
• Inventory Accuracy: The more accurate a company maintains its levels of raw materials and finished goods inventories, the lower the level of inventory, as planners have better trust in the numbers upon which they are planning.
• Order Patterns (Seasonality): Less consistent demand patterns can lead to higher inventory levels. As an extreme example, some wrapping paper manufacturers build inventory all year to ship only in the couple of months before Christmas.
• Metrics: What gets rewarded? Metrics drive behavior, and it is no different with inventory. Have a plant that is driven primarily by yield and cost per unit metrics? Expect more inventory, for example.

* from Supply Chain Digest Letter July 2008

1. Select a theme for each walk

2. Question the supervisors

3. Listen (and learn) attentively

4. Share what you learn as you walk

5. Write a short memo on what you learned and post it for all to see

6. Follow up to see that progress is being made

1. Ownership Rule - the person who first detects the problem is responsible for finding the root cause of the problem.

2. Quickly Rule - the problem must be dealt with and solved within 30 minutes, not put on a list or in a report for action at another time.

3. Actually Rule - if possible play back or recreate the process that occurred before the defect.

4. Support Rule - the person who detects the problem has primary responsibility for solving it, but supervisor and fellow workers can stop working and lend problem solving support.

5. Shut Up Rule - the discoverer is expected to solve the problem and be allowed time to dicsuss the problem and attempt to solve it.  Others can help but the supervisor or manager must keep quiet and give the person a chance to solve the problem.

The King

Looking out

Onto the Land

In the Hot Sun

Where the Pigs are

Gemba - where to go to understand: not in the office or a conference room, but in the real place.

Posting project team information on the wall of a dedicated ’situation room’: Mieruka: visualization

Personal Magnetism: Jinbo.  When Toyota evaluates their supervisors and managers they emphasize process performance, learning, and teaching over results, goals, and objectives.

Adhesive Strength: Nebari Tsuyosa.  Persistence and resilience are Toyota’s measure of manager performance.

Drinks with fellow workers: Nomikai. Sharing information, learning by visiting.

"Let’s Yokoten": communication is viral, literally: unfold or open out sideways.

Committees: Iinkai; every Toyota employee belongs to several.

Self organized study groups: Jishuken.

Consensus building; shopping an idea around: Nemawashi.

Five Frogs are sitting on a log.  Four decide to hop off.  How many frogs are left?*

It doesn’t take much for good intentions to end up in disaster.  It’s been my recent fate to be involved in two failed mergers, one a postmortem, the next a trainwreck-in-progress.  Integrating distribution, logistics, information, management and financial systems; oh, and the people is a tough tough thing.  The deal makers fall in love with the potential synergies and then all too often with out a plan or a process hope that magic will happen once the deal is done.

"Five Frogs on a Log: A CEO’s Field Guide to Accelerating the Transition in Mergers, Acquisitions, and Gut Wrenching Change” by Mark Feldman and Michael Spratt is a great guide, and not just for mergers and CEO’s but for any organizational change event and those who are caught up in the maelstrom of clashing cultures.  A little light on methodology, this book will let you know what to expect from the merger/acquisition, encourage focusing on execution, the importance of communicating even when in the fog, it’s a virtual project plan for you and your leadership team. 

Read it!  Hopefully before, not after the chaos starts.

*Five. Because there’s a difference between deciding and doing. "Execution," the authors tell us, "is always more difficult than it seems."

Why is it that most lean and six sigma transformations are so complicated?  All too often organizational transformations are loaded with tons of non value-added waste: status reports and senior management presentations that serve little or no purpose,  training provided on tools that can’t or won’t be applied, unsustained and unsustainable changes made, flying people around the country or world, waiting for the right time or resources, long lists of assignments, window dressing.  Applying seven wastes thinking to lean might make transformations a little easier.

Resource + Creativity + Freedom and a Process = Lean Sigma Success

1. Map the process and determine feasibility by evaluating demand linearity

2. Select work group, line, or cell and determine available time, cycle time, change over time

3. Calculate the Product Family Turnover Rate (PFTR) or otherwise known as the EPE Interval

4. Use the PFTR to determine production run sizes for each product

5. Determine input and output buffer sizes

6. Simulate either with desktop role modeling, spreadsheet, or simulation software

7. Establish Kanban controls

8. Setup the Heijunka