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Newsletter no. 1
may 2011

One valuable mail, every 4 months
business-improvement.eu

Dear sir, mrs,

This is the very first newsletter of business-improvement.eu!

If you like our site, we hope you will help to spread the news of our existence, for example by forwarding this newsletter or by linking to our articles.

Business-improvement.eu is a knowledge platform about business improvement methods, without prejudice of which method is best. You should see us as a source of ideas. No matter which method you choose – be it  Lean, Six Sigma, TOC, QRM or TPM - you should realize that process improvement is not about adoption but about adaptation!

Lean manufacturing for example is not something static. It is simply the state of the art to produce timely and at lowest cost the products or services your customers need. The way we think this should be done will continue to evolve, as it did during the last centuries. In developing what we call ‘Lean’ today, but probably different tomorrow, time after time different companies took the lead. Lean evolved from the literally flowing production of ships in Venice in the sixteenth century, to the moving assembly line of Ford in 1913, and from there to the Toyota Production System with Andons and Kanban. So, when you want to start with Lean, realize that you will become part of a very long tradition with ups and downs. Therefore, do not copy some kind of ‘template’ but adapt lean manufacturing with trail-and-error to your own situation. 

The fact that Lean is a product of evolution is reflected in the way best practices are described in the management literature. First Lean was presented as a method to reduce waste. Later the focus shifted and Lean was described as a way to maximize the value stream to the customers. Today, Lean is repositioned again. Now, it is a method to transform all your employees into creative problem solvers, working on a common goal: minimal waste and maximal value creation. The book Toyota Kata is a perfect example of this. In this newsletter you will find an extensive review of this book including comments by the author, Mike Rother.

Besides two other book reviews, you will also find case descriptions in this newsletter: The application of Lean within the ThedaCare hospital, and the use of Total Productive Maintenance within the breweries of Heineken.

Finally Eliyahu Goldratt, the founder of the Theory of Constraints, analyses the way in which our supply chains react to economic up- and downturns.

Hope you enjoy our newsletter!

Best regards , 
Dr Jaap van Ede, 
owner and editor-in-chief business-improvement.eu

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A. Outline of new in-depth articles:

1. Lead & Change:  Toyota, a company of problem-solvers!
Review:   Toyota Kata

2. Lean:  ThedaCare's Lean Journey: On the Mend   
Case:  ThedaCare Hospital

3. Lean Six Sigma:  Increase your business speed!
Review:   Lean Six Sigma Guide to doing more with less

4. TOC: The Power of Cause and Effect   
Analysis:  Goldratt explains behavior supply chain

5. TPM:  Heineken's cascade of performance indicators*
Case:  Heineken

*) free registration is needed, we respect your privacy

6. QRM:  The power of accelerating supply chains   
Review:  It's about time



Summaries of the articles above you will find below. For more case descriptions, see our case-menu.
Do you have suggestions, remarks, ideas?
 Please send us an e-mail

B. Summaries new articles about the application of continuous improvement methods*:
(*Lean, Six Sigma, TPM, TOC, QRM, Lean6S, WordClass, BPM)

1. Lead & Change:  Toyota, a company of problem-solvers!
Review: Toyota Kata


Cover Toyota Kata and author Mike Rother    
^ Cover Toyota Kata & author Mike Rother

After six years of research in Toyota factories, Mike Rother describes in his book Toyota Kata how this car manufacturer manages their people.Toyota Kata is an excellent book, which really adds something new to the existing Lean literature!

The main message: Behavior routines, the so-called Improvement Kata and Coaching Kata, determine how everyone within Toyota strives iteratively to reach a Target Condition. This brings the company a step closer to a Vision, be it along a route that is a priori unclear and full of hidden obstacles. This is therefore something completely different then our management by quantitative and financial targets, in which not only what but also how things should be done is determined beforehand.  This results in ‘projects’ or ‘action-lists’, which often often fail due to unforeseen barriers.

This organizational difference explains why many Western companies until now often could become Lean, but failed to stay that way. Toyota turns out to be an organization in which everyone is a problem-solver, guided by a coach!  Can we learn to climb a mountain in the fog like Toyota does, and perhaps even become better than they are in developing new Lean tools?

Read what we learned from this book. In addition, Mike Rother reacts extensively to our findings!

> more
2. Lean:  ThedaCare's Lean Journey: On the Mend   
Case: ThedaCare Hospital


ThedaCare On The Mend
   
^ Left: cover On the Mend, right: doctors and
   nurses working on process improvement


During the last eight years, ThedaCare was transformed to a lean and patient-focused health organization, with respect for the work of the nurses and doctors, but with measurable and therefore sustainable results. This journey is decribed in the book On the mend – revolutionizing healthcare to save lives and transform the industry.

Not only the processes changed, but also the managers. The introduction of lean principles radically changed their role, which became more humble and facilitating. What can we learn from the lean journey of ThedaCare?

> more
3. Lean Six Sigma:  Increase business speed!
Review: Lean Six Sigma Guide to doing more with less


Author Mark George and cover The Lean 
Six Sigma Guide to Doing More with Less
   
^ Author Mark George and cover "The Lean
   Six Sigma Guide to Doing More with Less"


To reap the full business potential of Lean Six Sigma three things are needed:
  1. Alignment of all your improvement projects with your business strategy. Lean Six Sigma only works well if the right projects are selected. 

  2. All improvement initiatives should be process oriented and holistic. Reducing costs locally doesn’t make sense when this leads to higher costs elsewhere. The aim should therefore be to increase the value creation of end-to-end processes. At best, this should also encompass your suppliers and distributors (extended enterprise principle).

  3. One of the best ways to lower the costs is to increase your enterprise speed, because this will make your company more agile and competitive.
These are the main messages in the book “The Lean Six Sigma Guide to Doing More with Less”, written by Mark O. George. Redefining Lean Six Sigma this way is not completely new, but the book gives a good helicopter view of the best practices today, and you will find many useful insights in it. Minuses are the strong focus on cost reduction and the somewhat confusing use of formulas in some chapters. Mark George responds extensively to our findings!

> more
4. TOC:  The Power of Cause and Effect
Analysis:  Goldratt explains behavior supply chain

Eliyahu Goldratt analyses the supply chain    
^ Eliyahu Goldratt investigates the supply
   of electronic consumer goods!


In his article The power of cause and effect no.2: the effects continue, Eliyahu Goldratt, the founder of the Theory Of Constraints, explains what happens when companies don't react to real market changes, but to (exaggerated) fluctuations in the amount of orders placed by what is only the next link in their supply chain.

Due to the economic recession, sales of electronic consumer goods dropped by as little as 2 to 3 percent at the end of 2008. However retailers, afraid to be left with inventory, decided to sell the goods on their shelves first, and therefore drastically reduced the amount of new orders in the first four months of 2009.This overreaction was passed on by the electronic consumer goods industry to their electronic components suppliers (link three in the supply chain), who faced an unprecedented drop in orders by 50%, Goldratt explains.

A kind of bull-whip effect, but in this case not driven by uncertainty but by fear! Around April 2009, the retailers regained their confidence in the market and started to increase the amount of orders, not only to meet customer demand, but also to replenish their stock. As a result, the next cycle of exaggeration and overreacting now threatens to begin: The electronic components suppliers can't keep up with the spike in demand, and therefore they think they should invest in extra capacity. According to Goldratt, that is the worst thing they can do. In the end that will not only leave them with overcapacity, also the prizes for their products will drop. Read Goldratt's article below!.

> more
5. TPM:  Heineken's cascade of performance indicators*
Case: Heineken


Structure of TPM program, Heineken
^ The TPM program of Heineken was
   implemented step by step

                
The Total Productive Maintenance Program (TPM) of Heineken started in 2003. Thanks to this program, thel breweries produce increasingly more efficient and with fewer losses.

The factory in ‘s Hertogenbosch in the Netherlands is one of the best production sites, concerning TPM. Here, the Overall Equipment Effectiveness of the packaging lines rose from 47 to 72%. In addition, productivity and quality are better then ever before! TPM-manager Age Posthuma explains this, by stressing three success factors: deployment, audits, and training. 

Of course, additional improvement is always possible. ‘This can be achieved by connecting our external processes better with the operations within the brewery’, says Posthuma. ‘Examples of those external activities are supply chain processes and the introduction of new machines and products.’

>more*
*) free registration is needed, we completely respect your privacy
6. QRM:  The power of accelerating supply chains   
Review: Rajan Suri's book It's about time


Toyota brand
^ Rajan Suri and part of the cover of his book
                
In his new book “It’s about Time” Rajan Suri, founder of Quick Response Manufacturing (QRM), teaches us the basics of this improvement method. The first chapter explains why reducing lead times should be given first priority, or more exactly: why we should always try to shorten the Manufacturing Critical Path Time or MCT. Then, three chapters follow about how to reduce the MCT:
  1. Form Quick Response Cells for Focused Target Market Segments.
  2. Apply System Dynamics.
  3. Make this a Unified Strategy, which includes suppliers and customers. 
It’s about Time is very well written and is much more concise than Suri’s original work published in 1998: Quick Response Manufacturing, A Companywide Approach to Reducing Lead Times.
Therefore this new book is very suitable for people who want learn the basics of QRM.  According to Suri, he wrote his new book for busy senior managers. Especially for this target group it is interesting that he added something new, an answer to what historically was one of the weakest points of QRM: How to make a business case!

> more

C. Brief news


The latest news (also about new published articles in specialist journals) you will find on on our newspage. Visit our site on a regular basis!


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© C.J. van Ede 2011 (NL/Europe/Worldwide)