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This is a photographic template – your photograph should fit precisely within this rectangle.

This is a photographic template – your photograph should fit precisely within this rectangle. Operational Excellence (Re)Structure for growth and stakeholder value Anders Davas Eaton Aerospace & Defence Forum - Orange County Chapter September 6, 2012

Introduction Anders Davas • Work Experience • Division Manager Eaton Aerospace • VP &

Introduction Anders Davas • Work Experience • Division Manager Eaton Aerospace • VP & GM Telair International (A Teleflex Company) • Strategic Development Teleflex • Operations Director Ensas • Education • The Wharton School • University of Cambridge • Chalmers – University of technology 2 2

Introduction Eaton Aerospace - Fuel & Inerting Systems Technologically Advanced Thermally Efficient Fuel Pump

Introduction Eaton Aerospace - Fuel & Inerting Systems Technologically Advanced Thermally Efficient Fuel Pump Refueling Nozzle Engine Feed Tube Pressure Transducer Pedestal Mounted Ball Valve Flexible Coupling Transfer & Scavenge Jet Pumps • • Pedigree First electric boost-pump manufacturer First composite-wing integrated system Complete ground-to-engine capability Pumps for all power sources • • Key Platforms Boeing 787 • Northrop X-47 Airbus A 380 • Eurofighter Sikorsky CH-53 K • Learjet 85 KC-46 A • KC-390 Engine Feed Pump and Canister Motor Operated Shut-off Valves Motor Control Unit Future Platform Innovations • Composite conveyance & equipment for low-cost, light-weight composite wings • Integrating in-tank sensing with inerting control for reduced bleed consumption Digital Fuel Gauging Air Separation Module 3 3

Introduction Agenda • Introduction • 4 -Focus Model • Strategy • Processes • People

Introduction Agenda • Introduction • 4 -Focus Model • Strategy • Processes • People • Systems • Pilot Implementation • Q&A 4 4

Introduction Operational Excellence Model – Proven results 43%+ 2011 40% 2010 2009 EBITDA Margins

Introduction Operational Excellence Model – Proven results 43%+ 2011 40% 2010 2009 EBITDA Margins 5 5

Introduction Turn Operational Excellence into a competitive advantage Value Company move to the left

Introduction Turn Operational Excellence into a competitive advantage Value Company move to the left • Increasing Labour Cost • Decreasing Labour force Frontier move to right • Competition moving to emerging markets • Availability of new labour • Competition is becoming better or cheaper Cost Improve performance/value Delivery, Quality, 6 & Cost 6

Introduction 4 -focus approach to operational excellence • Strategic Planning • Strategic Deployment •

Introduction 4 -focus approach to operational excellence • Strategic Planning • Strategic Deployment • Goal Setting 1. Strategy • • Automate ERP Efficiency Poke-Yoke Visual Mgmt 4. 2. Processes Systems • • • Value Adding Standardized Continuous Improvements 3. People • Accountability & Commitment • Engagement & Development • Competence & Confidence 7 7

This is a photographic template – your photograph should fit precisely within this rectangle.

This is a photographic template – your photograph should fit precisely within this rectangle. Strategy Systems Processes People

Strategy Key dimensions of a strategic plan Business Unit & Group Overview Technology Road

Strategy Key dimensions of a strategic plan Business Unit & Group Overview Technology Road Map SWOT Analysis (situation analysis) Strategic Plan Growth Product Developments Market Analysis Competitive Analysis Investment Opportunities Value Proposition Mfg. Strategy Product Strategy Internal External 9 9

Strategy Value analysis to identify core manufacturing activities Core Non-Core High Utilization Maintain/ Optimize

Strategy Value analysis to identify core manufacturing activities Core Non-Core High Utilization Maintain/ Optimize Outsource BCC Low Utilization Product/Process Right-size / Consolidation Outsource Experts 10 10

Strategy Maximize performance through best manufacturing practice Six Sigma processes Variation Reduction & Six

Strategy Maximize performance through best manufacturing practice Six Sigma processes Variation Reduction & Six Sigma Flexible & leveled production Smoothed production Material Pull Flow cells Visual Factory Paced ops Kan-Ban Parts withdrawal Balanced & Standard Operations Super Market Standard Work instructions Line feed Milk-Run Flexible Cells & Error Proofing 5 S, Visual Management & Tiered Meetings VSM, Product Grouping & Capacity Planning Move beyond 5 S+ to unlock potential in organization. 11 11

Strategy Deployment – Create alignment, accountability and commitment. Strategic deployment matrix and scorecard -

Strategy Deployment – Create alignment, accountability and commitment. Strategic deployment matrix and scorecard - Organizes thinking and links action to strategy - Aligns functions for goal setting - Identifies/Establishes break-through actions - Provides tools for continuous improvement - Communicates goals and performance 12 12

Strategy Set stretch metrics and identify breakthrough initiatives HOW FAR All items are listed

Strategy Set stretch metrics and identify breakthrough initiatives HOW FAR All items are listed in priority order starting from the center HOW MUCH WHO WHAT 13 13

Strategy The whole picture of your company on one sheet of paper Use dots

Strategy The whole picture of your company on one sheet of paper Use dots to show relationship of Targets and Resources to the Improvement Priority Use dots to show relationship of Improvement Priorities to Annual Objectives HOW Use dots to show relationship of Annual objectives to 3 year strategic plan HOW FAR NOTE: Only Solid dots on a resource deploy to the next level HOW MUCH WHAT 14 14

Strategy Example of SD-Matrix 15 15

Strategy Example of SD-Matrix 15 15

Strategy Improvement priorities cascaded to the point of impact Top Level – Company/Group Action

Strategy Improvement priorities cascaded to the point of impact Top Level – Company/Group Action Plan Second Level – Plant/Business The level where root causes are addressed! Action Plans can be initiated out of any matrix level. Third Level Sub Plant/Dept 16 16

Strategy Each target is copied to the SD score card 17 17

Strategy Each target is copied to the SD score card 17 17

Strategy Action plans drive the rate of improvement ACTION PLAN 18 18

Strategy Action plans drive the rate of improvement ACTION PLAN 18 18

This is a photographic template – your photograph should fit precisely within this rectangle.

This is a photographic template – your photograph should fit precisely within this rectangle. Processes Strategy Systems Processes People

Process Lean Management Philosophy Standard Accountability Processes Process Focus Leader Standard Work - PDCA

Process Lean Management Philosophy Standard Accountability Processes Process Focus Leader Standard Work - PDCA - Visual Controls A Foundation for Operations Excellence 20 20

Process Good Leaders Execute & Improve Planning • • • Strategic Planning Strategic Deployment

Process Good Leaders Execute & Improve Planning • • • Strategic Planning Strategic Deployment Profit Planning B-Work A-Work Business Operating System • VSM • GEMBA • Root Cause Analysis • Process – FMEA • Lean Six Sigma LSSS • HPWT • Lean Councils Plan Do Act Check Business Operating System • Balanced Scorecard • Standard Work • Visual Management • GEMBA • Accountability • HPWT A-work – Value Creation Process – Delivery & Quality + B-work – Improvement Process – Faster, Better & Cheaper = 21 Focused team with a continuous improvement culture 21

Process Tiered meeting accountability and execution process – A-Work Escalation Tier 3 Attendees Agenda

Process Tiered meeting accountability and execution process – A-Work Escalation Tier 3 Attendees Agenda / Focus • Mfg Manager • Value Stream Leader • Support Mgr • Daily performance data (yesterdays) - Safety - Quality - Delivery - Cost • Overdue items and actions Escalation Tier 2 Tier 1 Develop efficient Tier Meetings: - Short and crisp - Visual - Structured and standardized agenda • Values Stream Leader • Cell leaders • Support group • • Labour Plan Daily rotation Plant Issues Improvement actions • Cell Lead • Team members • Labour Plan • Daily rotation • Cell issues/solutions (Forward looking)) - Stand-Up - Close to workplace 22 22

Process Example - Tiered Meetings in action…. A-Work Metrics Board Accountability Board 23 23

Process Example - Tiered Meetings in action…. A-Work Metrics Board Accountability Board 23 23

Process Standard leaders work to ensure leaders react to signals Standard and aligned schedule

Process Standard leaders work to ensure leaders react to signals Standard and aligned schedule 24 Process confirmation 24

Process Data driven improvement process – Balanced Scorecards – B - work 1. Actual

Process Data driven improvement process – Balanced Scorecards – B - work 1. Actual vs. Plan Assess the impact 1 2 2. Pareto analysis Prioritize the impact 3 3. Commentary Identify Root Cause 4. Improvement action plan Drive Short term containment Implement Long term prevention 4 25 25

This is a photographic template – your photograph should fit precisely within this rectangle.

This is a photographic template – your photograph should fit precisely within this rectangle. People Strategy Systems Processes People

People Transition away from a traditional manufacturing organization Plant Manager Supply Chain Quality Engineering

People Transition away from a traditional manufacturing organization Plant Manager Supply Chain Quality Engineering Department Manager 1 Manufacturing Department Manager 2 Manufacturing Engineering Continuous Improvements Human Resources Department Manager 3 27 27

People To a value stream centric organization with high performing teams Plant Manager Quality

People To a value stream centric organization with high performing teams Plant Manager Quality C. I Quality M. E C. I Value Stream Manager Planning M. E C. I Value Stream Manager Supply Chain EHS Quality Value Stream Manager Supply Chain EHS M. E Planning Cross functional teams Located close to workspace Supply Chain EHS Planning 28 28

People Redefine the Role of the Front Line Leader Supervisor Selected based on technical

People Redefine the Role of the Front Line Leader Supervisor Selected based on technical capability / process knowledge • • • Directive (“Do as I say”) An Expediter Disciplinarian Enforcer Top-down Front Line Leader Selected based on leadership Competencies • • Supportive / Coaching Intrinsically motivated Future vision orientation Life-long learner 29 29

People Attract the right leaders Leaders need to… • Provide the vision and strategy

People Attract the right leaders Leaders need to… • Provide the vision and strategy • Lead by example – be a positive role model • Actively engage and recognize employees • Enable success of your employees (resources, barriers) • Empower the employees – drive decision making down through organization Empowerment Engagement Values and ethics Leadership to create the environment Leadership to drive and stimulate change A balanced Leadership Team 30 30

This is a photographic template – your photograph should fit precisely within this rectangle.

This is a photographic template – your photograph should fit precisely within this rectangle. System Strategy Systems Processes People

System Create flow cells and an environment to support flow. High productivity assembly cell

System Create flow cells and an environment to support flow. High productivity assembly cell Kan-Ban driven Super Market Poke-Yoke Bar-Coding Line Fed material at Point of Use System 32 Pace board A-Work 32

This is a photographic template – your photograph should fit precisely within this rectangle.

This is a photographic template – your photograph should fit precisely within this rectangle. Moving Forward

Moving Forward Pilot Line 34 34

Moving Forward Pilot Line 34 34

Moving Forward Systematic approach to achieve excellence 35 35

Moving Forward Systematic approach to achieve excellence 35 35