InternalResultantTraining(July30-August10,2001)HongKongPROPRIETARY

?1998ThomasGroup,Inc.AllRightsReserved.

TableofContentsIntroductiontoThomasGroup,Inc.TotalCycleTimeatEsquelGroupTCTBasicsCrossFunctionalTeamsProcessMappingMeasurementsBarrierRemovalBarrierCharacterizationUsingCause&EffectDiagramsCyclesofLearningandEffectiveMeetingManagement

WhatistheThomasGroup?

WeareauniqueinternationalmanagementservicescompanythathelpsclientsimprovetheircompetitivenessandfinancialperformanceFoundedin1978;annualcompoundgrowth>30%Over200seniormanagementexecutiveswithbroadskills&experienceAverageoperationsmanagementexperienceperResultantis22yearsProprietaryTotalCycleTimeMethodologytoimplementchangeGlobalHeadquartersLocations:Dallas,Detroit,Frankfurt,SingaporeandHongKongOver300successfulcycletimereductionprograms

TGIMissionToMakeBusinessesCompetitiveByUsingToDriveTotalCycleTime?ImprovedResponsivenessandAcceleratedResultsusingMinimumResources3R’s

WhatWasThomasGroup’sRoleAtEsquel?

Outsideobjectivechangeagent…committedtoimprovedresultsDefinebusinessprocessescriticaltoEsquel’scompetitivenessEstablishaggressiveperformancetargetsatwhichEsquelisentitledtooperate….dramaticimprovementsoverbaselineApplyThomasGroup’sTotalCycleTimemethodologytohelpEsquelreachentitledperformance….withineighteenmonths

TotalCycleTime(TCT)Basics

CorporateCompetitivenessis

Drivenbythe3R’sRespondingquicklytocustomersneedsforpresentandfutureproducts&services.Resultsacceleration,particularlyinfastdelivery,lowercostsandimprovedquality.Resourceeffectiveness,particularlyinpeoplecostsandcashtied-up.RRRFaster&BetterResultsthantheCompetition-ButusingfewerResourcesthantheCompetition

BusinessasaseriesofProcessesAllbusinessesorganizations(whethermanufacturing,services,development,software,etc.)arecomposedofaseriesofdifferentbusinessprocesses.Thesebusinessprocessstepsmustbe:DocumentedandanalyzedtoensurethateachhasvalueCanbeexecutedintheminimumtimeHavethehighestpossibleaccuracyorFirstPassYield.

Thetimeittakesinallbusinessprocessesfromidentificationofanunmetmarketneeduntilthatneedissatisfied.CycleTimeis:

ThetimeittakestogetsomethingdoneManufactureaproductDevelopaproductDeliveraserviceInstallafactoryReducecostsImprovequalityThetimeittakestochangethewayacompanydoesthings.

MostdifficulttochangeTotalCycleTimeis:

Thecombinedeffectofthecycletimesofallbusinessprocessesfromthetimeaneedexistsuntilitissatisfied.TotalCycleTime(TCT)drivesImprovement

TotalCycleTime(TCT)drivesImprovement.AsuccessfulTCTProgramsuccessfullyreducesthecycletimesofallidentifiedbusinessprocessesandintegratestheseprocessesintoaseamlesstotalbusinessprocesswithaminimumTotalCycle

TimeCrossFunctionalTeam(CFT)WhatisaCross-FunctionalTeam?AteamrepresentingthevariousfunctionalareasofoneormorecompaniesTheMissionoftheCFTteamistoachieveagreedupon,specificobjective(s)Theobjectivesareultimatelyaimedat:DrivingcontinuousimprovementinkeybusinessprocessesRadicallyimprovingtheorganizations’globalcompetitivenessInternalizingtheTCTprocessestoensurecontinuationoftheprocessimprovementWhyareCross-FunctionalTeamsNeeded?ProblemsandsolutionsdonotcompletelyresidewithinonedepartmentAllfunctionalelementsinvolvedinaprocessneedtocontributeMembersshouldbringknowledge,objectivityandnewviewpointstoproblemsolvingTheRoleoftheCFTTheCFTistheprocessownerofthekeyprocessesidentifiedforimprovement.ThisprocessimprovementismeasuredbyCycleTime(CT)andFirstPassYield(FPY)results.TheCFTisresponsiblefor:TheidentificationofthekeyprocessesTheperiodiccollection,analysis,displayandreportingoftheCT,FPYandothermeasurementsdata.Identificationofbarriers,substituteprocessesandnonvalueaddedactivitieswithineachprocess.MaintenanceandexecutionofacontinuouslyupdatedbarrierremovalplantoachieveorsurpassentitlementinCTandFPY.RoleandResponsibilityofCFTLeadersEnsurethatTCTprocessisfollowedandthatresultsareachievedquicklySetcleargoalsandholdtheteamaccountableLeadteamincarryingoutitsobjectivesEnsurethatteammeetingsareactionoriented(3W’s)KeepteamfocusedwithoutdominatingmeetingsTransferrequiredCFTskillstonewmembersRoleofTeamMembersResponsibleforcontributingtotheteam’’ssuccessby:Representingcompany(empowereddecisionmaker)Communication;inputfromandtotheirfunctionalorganizationAttendingandactivelyparticipatinginallmeetings,orprovidinganempoweredsubstitutetoactandmakedecisionsforthemWorkingwiththeteamtoidentifybarriersandtheirrootcauses,rankingandremovingthemDevelopingActionPlansanddrivingthoseActionPlanstocompletionUsingmeasurementstotrackprogressandassurespecificbusinessprocessorprocessesprogresstowardandreachentitledperformanceRoleofTheScribePreparesanddistributesthemeetingagenda2-3daysinadvanceofthemeeting.Thisensuresparticipantscometothemeetingprepared.Note:MembersshouldsubmitdocumentationtobediscussedinthenextmeetingtotheScribeforattachmenttothemeetingagenda.PreparesanddistributesthemeetingminutesandW3swithinoneworkingdayfollowingthemeetingdate.TheMinutesaretoincludeAttendance,Summaryofthetopicsdiscussed,Significantdecisionsmade,Nextmeetingdate,timeandvenue,OldW3swithstatusandNewW3sRequestsfeedbackonminutesfromteamtoensurethattheyreflecttheconsensusoftheteamMaintainstheoldandnewW3slistingsothatW3’’s(what,who,andwhen)arealwayscurrentHighlightsW3completionsandshortfallstoteamforfurtheractionMaintainsaccurateandupdatedCFT/BRTChartersPublicizesteamssuccessesServesasteamtimekeeperifnoneassignedNO.WhatWhoWhenStatus1234W3’sTeamLeader:TeamObjective:Scribe:Start:End:RoleofTheMeasurementSpecialistTheCFTMeasurementSpecialistisresponsibleforleadingandadvisingtheteamonmeasurements.Functionsperformedare:WorkswithBITmeasurementownertocoordinatemeasurementactivitiesfortheCFTteamWorkswithteammemberstocollectmeasurementdatatodefineBaseline&EntitlementWorkswithteammemberstoassistintheminanalyzingmeasurementdataMonitorsimprovementofactualcycletimes,firstpassyield,AIP/WIP,delivery,cost,productivity,etc.DevelopsreportingformatswithhelpfromtheteamEnsuresthatallmeasurementstatusispublishedregularlyintheformofanapprovedCFTCockpitChartTheTCTProcess-TheMethodologySequence……16STEPS1.Identifythekeybusinessprocess2.Establishthescopeoftheprocess3.Identifyandbringtogetherthe4. Validatethescopeanddeterminetheprocessboundaries5. Maptheprocess,includingCTandFPYdataforeachstep6. Establishbaseline(“asis”)performanceinCTandFPY7. Determinevalue-addedandnon-value-addedprocessstepsandactivities8. Removenon-value-addedstepsandcreatea“should-be”map

(Entitlementprocess)9. Determinemeaningfulmeasurements10. Designthemeasurementsystem-drivedesiredbehavior11. EstablishinitialentitlementgoalsinCTsandFPYs,othermeasurements12. Identifythebarrierstoprocessimprovement13. Developcause-and-effectdiagramtofindtherootcausebarriers14. Rank-orderrootcausebarrierstodeterminethebestcourseofaction15. Assignandschedulebarrierremovalactions(BRTs)16. TrackprogressthroughthemeasurementsystemTHE16STEPPROCESSCANBEBROKENDOWNINTO4GROUPSOFACTIVITIESIDENTIFYthekeyprocesses,processownersandkeyplayersDeterminethescopeandMAPtheprocessesSetupaMEASUREMENTsystem,determinebaselineandentitlementIdentifyandremoveBARRIERStoimprovedprocessperformanceandmanageimprovementwithdrumbeatfeedbackprocessProcessMappingBusinessProcessManagementEverythingwedoininourcompanyfitswithinabusinessprocessandHasaProcessFlowthatcanbedevelopedHasHistorythatcanbeanalyzedHasaFirstPassYieldHasaPerformanceBaseline/EntitlementHasactivitiesthatareNon-Deterministic(unpredictable)CanbeMeasuredbycost,firstpassyieldandcycletimeBusinessProcessMapsInordertostarttheTCTProcess(Step5ofthe“16Steps”)itisnecessarytoconstructProcessMap(s)ofthecriticalbusinessprocessesProcessMapsareagraphicalpictureoftheflow(intime)ofaprocessoractivityProcessMapsprovideanoverviewoftheprocessanddescribethepaththeprocessfollowsfrombeginningtocompletion(starttostopasdefinedinthecharter)ShowhowtheprocessesworkacrossfunctionalandgeographiclinesProcessmapsaredrawnatvariouslevelsofdetailtoaMapping…..ScopeoftheProcessWemustfi

Whatistheprocesstryingtoaccomplish?

Thescopeofanyprocessconsistsofthreeparts:StartPoint-Identifytheeventthatbeginstheprocess(suchasreceiptofanorder)StopPoint-Identifytheeventoritemthatconcludestheprocess(suchasshipmentofacustomer’sorder)ProcessBoundary-determineswhichtransactionsandactivitiesaretobeaddressedintheProcessMap.(Forexample,areweaddressingallproductsthataremadebyacompany,orjustoneproductline?)Maps……Cross-FunctionalDiagramsListthefunctions/organizationsdowntheleftsideofthesheetofpaperShowtheprocessasaprogressionfromlefttorightastheprocessismappedacrossthepageThesymbolswhichrepresenteachstepareplacedinthesameroworrowsasthefunctionsinvolvedintheprocess.TGI’sbasicsymbolsetforcross-functionalflowdiagramsinahigh-levelprocessareshownbelow.ProcessstepPrepareForecastApprove?DecisionRepeator

reworkstep(s)GoBacktoStep2Inventory(nonfirst-in/first

out)orbacklogNondeterministic

processstepStockroomDesignNewCodeStartscontrolBusinessProcessManagementInadditiontotheabove,elongateasymbol,toptobottom,toshowparticipationinthesameprocessstepbymorethanonefunctionand/ororganization.IftheparticipatingfunctionsarenotlistedadjacenttoonArrowsalwaysShowreiterationlikethis:Showdecisionslikethis:Approved?RepeatpreviousprocessfromXtoYYesNoApproved?YesNoorColor2OrangeRedBlueCross-FunctionalMappingProcessDefinescope.Listfunctionsinvolveddownlefthandsideofpaper.Identifysequenceofactivities.Correlateactivitieswithfunctions.MapactivitiesfromlefttorightcorrespondingtotheadvanChangzhouProcessMap(Page1)CT1B/L:18ENT.14FulfillmentFPYB:55.4%,E:85%FPY3B=97%E=100%1.75Unit:DayFulfillmentCTChangzhouProcessMap(Page2)FPY4FPY5FPY6FPY7FPY8B=87%E=96%B=92%E=95%B=80%E=95%B=94%E=100%B=95%E=98%Unit:DayB/LENT.5.2566.581.53CT2CT3CT4MeasurementsMeasurementsMeasurementsarenecessaryto““keepscore”Measurementsmustbesimple,easMeasurementsshouldnotbe“corruptible”TimeandFirstPassYieldarethebestmeasurementsStaticandDynamicCycleTimesCycleTimeshavespecificstartandstoptimes.CycleTimeisabasicmeasureofprocesseffectivenessandagoodindicatorofthedisciplineandorderwithinaprocess.OnemustdifferentiatebetweenStaticandDynamiccycletime:StaticCycleTime(sCT)isasummaryofpastactions(history).Itisalaggingindicatorandisusuallyappliedtoprocessesthatchangeslowly.DynamicCycleTime(dCT)isthepresent““pulserate”ofaprocessand,thus,aleading(predictive)indicator.StaticCycleTimeMeasurementStaticcycletimeisthehistoricalmeasureofcycletimebasedonanalysisofindividualoutputsofaprocess.Staticcycletimeisalaggingindicatorbecauseitreportsresultsaftercompletion.CollectData,UseCollectedDatatoIdentifyWheretoLookFrequencyofOccurrenceWhatishappeninghere?Usehigh/lowdiagnosticanalysisandespeciallyhere?StaticCycleTimePopulationofOneAfabricmanufacturingprocesswhichstartsonJune12andconcludesonJuly19hasastaticcycletimeof37days.StartJune12StopJuly19StaticCycleTime=37DaysStaticCycleTime(Forpopulationsofmorethanone)Onecanaveragethecycletimesofworkactionscompleted.Forexample:30shirtscompletedduringaspecifictimeperiodhadthefollowingdistribution:4completedin2days3completedin7days8completedin3days2completedin8days7completedin4days6completedin9dayssCT=Staticcycletime=(4X2)+(8X3)+(7X4)+(3X7)+(2X8)+(6X9)30sCT=5.03daysforthatspecifictimeperiodDynamicCycleTime(normal)DynamiccycletimeisthecurrentprocessingtimeforarelativelyhighvolumeofactivitieswhereInProcessinventoryexistsatboththebeginningandendoftheperiod.DynamicCycleTime=ActionsinProcess(AIP)AverageProcessingSpeedNOTE:Theperiodoftimemaybeoneday,oneweek,onemonth-theshorterthetimeperiodthemoreinstantaneousthecycletimemeasurementDynamicCycleTimeIsaleadingindicatordCT=AIP’’s/ProcessSpeedAIP’’sandprocessspeedcanvarythroughmeasurementperiodNeedparameterestimatesDynamicCycleTimeExample(Alldataisforaonemonthtimeperiod)Beginninggarmentinventory 4600Endinggarmentinventory 3600Garmentsouttostock 31500Anaveragegarmentrequires3.9daystoprogressthroughthewaitingqueuesandprocessesandtoexitfromtheline.AverageWorkinProcessProcessSpeed=Beg.Inv.+End.Inv.)/2OUTSCT===(4600+3600)

410031500Month231500==.13(30days/month)3.9daysNon-ManufacturingCycleTimeExampleYouareoperatingapurchasingorganizationwiththefollowingcharacteristics:Work-in-processinventorybeginningofmonth= 1,800ordersWork-in-processinventoryendofmonth=2,200ordersTheaveragedailyplacementrateis=125perdayWhatisthecycletimeoftheoperationinworkdays?DynamicandStaticCycleTimeComparisonStaticCycleTimeDynamicCycleTime1.Laggingindicator1.Leadingindicator2.Formulainvolvesonlycycle2.FormulainvolvesAIPstimesofcompletedactionsandprocessingspeeds,notjustcompletions3.Goodforlowtransaction3.Goodforhighprocessstepstransactionprocesssteps--developnewproductsbigamountproduction--=CompletedCT1+……+CTn=AverageAIPsnAverageProcessingSpdProcessTotalCycleTimeSubProcess#1(MarkerMaking)SubProcess#2(Cutting)SubProcess#3(Sewing)SubProcess#4(Washing)SubProcess#5(Press/Pack)CT1+CT2+CT3+CT4+CT5=TotalCycleTimeProcessesareoftencomprisedofseveralSubProcesses…….FirstPassYieldFirstpassyield(FPY)ismeasureoftheQualityofaProcess.No.AIPsCompletedToSpec,withoutrework,firstpassFPY=X100TotalNumberAIPsProcessedFirstPassYieldislessthanorequaltoprocessyield(actual)becauseProcessYieldtypicallyincludesrework.ThedenominatorincludesanyAIPwhichleavestheprocessbeingmeasured.Thisincludessuccessfulcompletions,cancellations,scrap,etc.FPYDefinedas….Thepercentageofactivitiescompletingaprocessthefirsttime,correctly,withoutrework.FirstPassYieldMeasurementsExamplesEngineeringPercentdrawingstomanufacturingwhichdonotchangePercentprojectsthatgothroughmanufacturingwithnounscheduledengineeringhelpManufacturingPercentincomingpartsneitherreworkednorreturnedPercentassemblykitscompletewhendeliveredPercentgarmentscompletewithoutreworkPercentsubassembliesintofinalassemblywithnoreworkTestPercenteachtestpassingfirsttimewithnowaits/noreworkPurchasingPercentpurchaserequestsokaytoorderwithnochangePercentincominggoodsabletobereceivedimmediatelyGenericFirstPassYieldModelSCOPEQueueWorkOK?ReworkOK?YesNoProcessYieldThisboundaryisdeterminedbywhatdataisavailableFirstPassYieldCancelScrapProcessBoundaryGenericFirstPassYieldModelSCOPEQueueWorkOK?ReworkOK?ProcessYieldThisboundaryisdeterminedbywhatdataisavailableFirstPassYieldCancelScrapProcessBoundaryYes90%No10%No20%Yes80%WhataretheFPYandProcessYieldhere?YieldCalculationstotalouts-rework-holdFPY% =totalouts+scrap+cancellationstotaloutsProcessYield%=totalouts+scrap+cancellationsPergiventimeperiodX100X100HowtocalculateFPY?BaselineandEntitlementBaseline:Anhistoricalor““asis”levelofperformance,verifiedbymeasurement(historicaldata-3monthsminimum)AppliedtoanymeasureSometimesgood,sometimesnotuptoexpectationsEntitlement:Animprovedlevelofperformanceresultingfromameasurable,documentedcycletimereductionprogramGenerallyequaltoorbetterthanindustrystandardsAnobjectiveratherthananarbitraryperformancelevelRequiresnonewresourcestoreachEntitlementBaseline,TheoreticalandEntitlementPerfectWorldLotsizeof1NoQueueNoset-upsNodowntimeDedicatedResourcesHistoricalbest(expeditedorhandcarriedlot)Comparisontocompetition’sbestComparisontobestofsimilarprocessinotherindustriesHistoricallybasedmeasurementoftheeverydayperformancelevelofabusinessprocessthathasbeenmapped.FactorappliedtotheoreticaltoestimateentitlementGenerally2to3xforaproductionorlinearprocessGenerally2to10xforanon-productionornon-linearprocessMultiplierprovidestransitionfromunobtainableperfectworldtoaccountforrealworldinefficienciesMultiplier3Theoretical24EntitlementBaseline1CycleTimeTypicalPerformanceDistributionsFrequencyofOccurrenceShorterLongerTheoreticalStrategicBestOftenRequiresIncreasedInvestmentEntitlementRealizablePerformanceUsingExistingResourcesBaselineExistingPerformanceMeasurementsReportingTheCockpitChartCustomerSatisfactionClaims($)&ReturnsCustomerSurveyResultsMarketShare%ofAddressableMarketUS&NonUSCycleTime(CT)QuotationsSamplesRevenueVolume&OperatingMarginHK,Gaoming&PenangMeasuredin$andinQuantity(dozens)OperatingincomeaspercentageCT&FPYOrderEntrySalesDiscountingFactoryLoading%ofCapacityDozens(actual)SalesExpensesVsBudgetVsRevenueOn-TimeDeliverySamplesProductionBarrierRemovalTypicalBarriersDyeprocessDefectdensityStrengthofmaterialsPricingColormatching&inspectionMerchandisingMaterialhandlingInspectionversuspreventionLargelotsizesBottlenecksPoorschedulingPoorprocessdesign/implementationReworkCommunicationLowfirstpassyieldPushvs.pullMeasurementsandcontrolsPerformanceincentivesBusinessisviewedasdisjointedfunctionsDenialNegotiatingpriceParadigmsthatresistchangeTop-DownManagementSubjectMatter BusinessProcessCultureWhyRemoveBarriers?ImprovecycletimeImprovefirstpassyieldImprovecostImproveotheroperationalindicesReducefrustrationBusinessProcessBarriersBarriersareInterrelatedCultureconstrainsbusinessprocessperformancethatinturnconstrainssubjectmatterperformance.Notremovingbarrierswillcreatesubstituteprocesses.Barriersandsubstituteprocessesoftenoverlapandaresometimesmutuallyreinforcing.Rewardingemployeesfortheuseorimplementationofsubstituteprocessestendstolock-intheexistingculturebarrierorparadigm.CultureBarriersSubstituteProcessesSubjectMatterBarriersBarrierIdentificationandCharacterizationSubjectMatterBarriers:Uniqueindustryorbusinesscontent:SewingmachinethreadtensionWorkstation’’sbootsequenceCellphonewiringschematicUniquefunctionalexpertisecontent:ManufacturingspecificationGarmentpatternmakingAccountingcostsystemMarketingdatasheetTypically,SubjectMatterBarrierscanberemovedbyindividualcontributorsiftheyarenotconstrainedbybusinessprocessandculturebarriers.BarrierIdentificationandCharacterizationBusinessProcessBarriers:PreventactivitiesfromfittingintoasetofseamlessprocessesthatmeetentitlementLotsizeBottlenecksintheprocessflowPoorschedulingPoorprocessdesignTypically,BusinessProcessBarrierscanberemovedbymiddlemanagementifuppermanagementandanoutsideleader/driverremovetheconstrainingculturebarriers.BarrierIdentificationandCharacterizationCultureBarriers:SomeexamplesLackofTCTMindsetViewBusinessasdisjointedfunctionsPoorResourceallocationOrganizationstructure(ormisuseoforganization)LackofaccountabilityLackofleadershipLackofrootcauseproblemsolvingTypically,BusinessCultureBarriersmustberemovedbyuppermanagementworkingwithanoutsideleader/driverSubstituteProcessSubstituteProcesses:Alternateprocessesand““work-arounds”thatemployeesimplementinordertoreduceoreliminatetheimpactofbarriers.Theyareanaturalgrowthfromthefailuretoremovesubjectmatter,businessprocessandculturebarriers.Substituteprocessesusuallyrequireadditionalresourcesby:Attackingthesymptomsofnon-responsivenessMaking“Just-in-case””investments(example..EXTRAINVENTORY)Cover-upinvestmentsandworkaroundsSubstituteProcesses-InventoryexamplesInventoryisputinplaceinanattempttomakeupforwhatcouldgowrongintheprocess.AcustomerordersmorethanexpectedordifferentmixAvendorhasprocessproblemsForecastingispoorResourcesnotavailable-equipmentgoesdownorpeopleareabsentScenarioInventoryAdditionFinishedgoodsinventoryRawmaterialinventoryAllformsofinventoryWork-in-processinventoryBarrierCharacterizationUsingCause&EffectDiagramsCauseandEffectDiagrams“Fishbones”TCTusescauseandeffectdiagrams(Fishbones)togeneratecause,effect,andsubstituteprocessdiagrams.Usethefollowingprocedure:1. Definetheeffect-thisisattachedtothe“spine”.2. Showthemajorcausesas““bones”belowthespine.3. Showthecorrespondingsubstituteprocessesas“bones””abovethespine.(Therewillbeoccasionswhentwoormorebarrierswillhavethesamesubstituteprocess.)4. Showthecultureconstraintsasopposingdoublearrow(ifapplicable).Thecauseshelpcharacterizetheeffect,somearesymptomsandsomearebarriers.Worksymptomsbackwardsuntilyoureachtherootcauseorprimarycauseforthebarrier.FishboneTheFishboneDiagramcanbeusedfortwodifferentpurposes.First,toarriveatrootcausebarriersandtheirrelatedsubstituteprocessesbyrepeatingthequestion,“Why?”.Second,toorganizebrainstormedlistsofcauses(usuallybusinessprocessandculture),substituteprocesses,andcultureconstraintsforahighrankingbarrieryouwishtoremove.TheCauseandSubstituteProcessDiagramSubstituteProcessSubstituteProcessSubstituteProcessPossibleCausePossibleCausePossibleCauseStatetheEffectEffect-AneventthatoccursasaresultofacauseContributingfactortocauseReasoncontributingfactoroccursWhichBarriersDoWeAttackFirst?Afteridentifyingallrelevantbarriers:Makefirst-passestimateofimpactoncycletimeofeach.Identifywhomustmakeremovaleffort:IndividualorSubjectMatterGroup(forexample:IT)BarrierRemovalTeam(BRT)SomelevelofmanagementMakefirst-passestimateofdifficultyofremovalofeach.Identifyanyexperthelpthatm