Presentation on LAI Supplier Networks Research Team progress on implementation toolse

Bozdogan, Kirk

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January 30-31, 2001Progress Report:IMPLEMENTATION TOOLSETFor Building Lean SupplierNetworksPresented By:Kirk BozdoganMITNOTE: Work-in-progress; this material represents the work product of theLean Enterprise Initiative (LAI) Supplier Networks Research Team; preparedfor review and comment onlyROADMAPImplementationI l iGUIDEBOOK Lean Knowledge Base ReferencesGlossaryInstructionsI l   lI iFRAMEWORKSelf Assessmentl  AssessmentLean  PracticesImplementationImplementationToolset VISIONEmphasis at this workshop: on FRAMEWORK & ROADMAP• FRAMEWORK self-assessment (“What”)–  Tool for gauging current state in lean journey in the suppli rnetwork design and management domain–  Links up with Lean Enterprise Self-Assessment Tool (LESAT)–  Encompasses key lean practices & lean capability levels–  Self-scoring framework• ROADMAP for building lean supplier networks (“How”)–  Implementation guide defining major building blocks &specific implementation steps -- sequence & relationships–  Maps out process template -- inputs, outputs, barriers,enablers, metrics, tools & methods, referencesFocusKB013001 - 3 ©2001 Massachusetts Institute of Technology  OBJECTIVE: Develop integrated lean implementation toolset• FRAMEWORK– Draft version developed by Steering Group (Sept 20-21, 01 -- BoeingLong Beach) & subsequent work in conjunction with LESAT– Ready for review & further refinement to develop ALPHA version• ROADMAP– ALPHA version developed through effort of entire team at workshops,on-going work by subteams & consolidation by Steering GroupWorkshop Jan 13-14, 00 WPAFB, OH• Team meeting, LAI Plenary Conference, March 29-30,00 Cambridge, MA• Workshop June 21-22,00 CMTC, Torrance, CA• Steering Group, Aug 10-11, IAMS, Cincinnati, OH; Sept 21-22,00 Boeing LongBeach)– Maps out process template -- inputs, outputs, barriers, enablers,metrics, tools & methods, references– Ready for further refinement & testingStatusKB013001 - 4 ©2001 Massachusetts Institute of TechnologyDEFINITION: Develop and manage the lean enterprise supplier network toprovide best value to the customer over the entire product lifecycle, inorder to optimize dynamic sustainable competitive advantage1.02.0Input: Enterprise-level supplier network design and management system,structure, processes, activities and metricsOutput: Assessment of the level of leanness of the enterprise in thesupplier network design and management domainDevelop and manage supplier network strategy linked tocorporate strategy: Design of the supplier network -- its structure,composition, and definition of differentiated roles and responsibilities --reflects core corporate strategic thrust to ensure long-term successSupplier relationships focus on optimizing the value stream: Thesupplier network is managed to create and deliver best value to thecustomer over the entire product lifecycle; major suppliers are viewedas full partners in the success of an integrated value network;emphasis on fostering continuous network-wide learning, knowledge-sharing and innovation                                   FRAMEWORK  (SUMMARY for  Enterprise-Level Self-Assessment)KB013001 - 5 ©2001 Massachusetts Institute of TechnologyOVERARCHING LEAN PRACTICES1.0 Develop and manage supplier network strategy linked tocorporate strategy2.03.04.05.0Integrate product and process knowledge, and fosterinnovation, over the entire supplier networkMaximize flexibility and responsiveness of the supplier networkEstablish long-term cooperative relationships with suppliers tomaximize mutual benefits throughout the value stream ContenderEstablish process of continuous performance improvementthroughout the supplier networkFRAMEWORK: Lean Practices(For Sub-Enterprise Level Self-Assessment)KB013001 - 6 ©2001 Massachusetts Institute of TechnologyLevel ITraditional -- No awareness of lean supplier network design andmanagement principles, practices, processes, activities  or metricsLevel IILevel IIILevel IVLevel VLearner - Limited awareness, but evidencing early stages of largelyinformal and piecemeal lean implementation deployed in one or afew areasPerformer - Systematic approach to lean implementation; deployed inall appropriate areas, functions and processes, with some still inrelatively early stagesContender - Mastery of lean principles and implementation; deployedin all appropriate areas; on-going refinement and continuousimprovementLeader - Exceptional command and implementation of lean principles;well-defined and innovative approach; lean fully deployed in allappropriate areas; recognized as world-class best practiceFRAMEWORK: Capability MaturityLevels*KB013001 - 7 ©2001 Massachusetts Institute of Technology*Note: Levels are cumulative; each higher level represents the achievement of the prior levelsLevel ISupplier relationships focus on optimizing the value streamLarge and hierarchical supplier base; arm’s length & adversarial relationships;build-to-print; supply chain management concentrated in purchasingdepartment; no alignment of supply chain design with corporate corecompetencies; no visibility into supplier capabilitiesLevel IILevel IIILevel IVLevel VSupplier base rationalized; some teaming/partnering with suppliers with highimpact on strategic objectives; long term purchase agreements areintroduced to focus on affordability & cost reduction; limited visibility intosupplier business processesLong-term relationships established with limited number of certified suppliers;early involvement of suppliers in design process;synchronization of productionflow over supplier network; delegation of greater responsibility to key suppliers;effective supplier development program in placeCooperative relationships with suppliers, including strategic partnerships andalliances, are in place, emphasizing a high level of information sharing, risk sharing,benefit sharing, and knowledge-sharing; differentiated supplier strategyDynamically optimizing the value stream, through electronic integration of thesupplier network, to achieve long term sustainable competitive advantageFRAMEWORK: “Straw-Man”Capability Maturity LevelsKB013001 - 8 ©2001 Massachusetts Institute of TechnologyEnterprise-Level Transition-to-Lean RoadmapLong Term Cycle Focus on the ValueStreamInitialLeanVisionShort Term CycleCreate & RefineImplementation ProgramLeanImplementationFrameworkAdopt LeanParadigmEntry/Re-entryCycleEnterpriseStrategicPlanningFocus on ContinuousImprovementOutcomes on Enterprise MetricsImplement Lean InitiativesEnterprise LevelImplementation Plan+Develop Lean Structure &BehaviorDetailed LeanVision+Environmental Corrective Action IndicatorsDetailedCorrective ActionIndicatorsDecision to Pursue Enterprise Transformation•Build Vision•Establish need•Foster LeanLearning•Make theCommitment•Obtain SeniorMgmt. Buy-in•Map Value Stream•Internalize Vision•Set Goals & Metrics•Identify & Involve KeyStakeholders•Organize for LeanImplementation•Identify & Empower ChangeAgents•Align Incentives•Adapt Structure & Systems•Identify & Prioritize Activities•Commit Resources•Provide Education & Training•Monitor Lean Progress•Nurture the Process•Refine the Plan•Capture & Adopt NewKnowledge•Develop Detailed Plans•Implement Lean Activities© Massachusetts Institute of Technology, 2000ROADMAP for Building Lean Supplier Networks4.0 Create LeanImplementation Plan  +        2.0 Develop Strategic Plan5.0 Implement LeanInitiatives1.0 Define Vision3.0 Establish LeanInfrastructure6.0 Strive for ContinuousImprovementKB013001 - 10 © 2001 Massachusetts Institute of Technology4.0 Create Lean Implementation PlanROADMAP for Building Lean Supplier Networks+    5.1 Refine, operationalize and communicate goals, objectives and      metrics throughout the supplier value stream5.2 Implement lean transition initiatives (on-going)      5.2.1  Select suppliers      5.2.2  Perform supplier qualification and certification      5.2.3  Deploy supplier development & mutual improvement initiatives      5.2.4  Initiate targeted change models (internal,external)-- Radical,                incremental;pilots (pilot-evaluate-scale up)      5.2.5  Implement procurement plan (e-business) & collaborative design                initiatives with suppliers within digital environment      5.2.6  Implement performance based contractual relationships                (e.g.,long-term relationships; partnerships; strategic alliances;                mutual gainsharing arrangements)      5.2.7  Conduct internal and external training as appropriate to achieve                lean implementation objectives5.3 Implement steps for managing knowledge & fostering innovation over      supplier network4.1 Define prerequisites for developing an implementation plan      4.1.1  Refine requirements for implementation plan      4.1.2  Refine lean principles, practices, processes & metrics                guiding the implementation plan      4.1.3  Define & map supplier value stream (current state, future                state), identify gaps and major opportunities4.2 Develop framework for implementation      4.2.1  Develop framework for supplier segmentation &                differentiated set of “must do” steps at different levels      4.2.2  Develop supplier selection criteria      4.2.3  Assess capability and lean competency of suppliers      4.2.4  Identify and prioritize supplier development initiatives      4.2.5  Develop supplier qualification and certification process      4.2.6  Assemble implementation toolset4.3 Create relationship-management plan with suppliers      4.3.1  Procurement plan (including e-business)      4.3.2  Long-term relationships; partnerships;strategic alliances      4.3.3  Contract design (strategies, incentives, gainsharing)      4.3.4  Target costing      4.3.5  Information-sharing, cost-sharing, risk-sharing4.4 Create plan for knowledge management & fostering innovation4.5 Commit resources for lean implementation1.1 Develop working knowledge of basic lean      principles for building lean supplier networks1.2 Ensure stakeholder commitment & align      expectations     1.2.1  Secure leadership commitment     1.2.2  Engage key stakeholders     1.2.3  Align mutual expectations1.3 Define enterprise vision for supplier integration1.4 Establish guiding principles driving strategic plan     development process     1.4.1  Define dynamic sustainable competitive              advantage     1.4.2  Define enterprise core competencies and              future trajectory     1.4.3  Provide strategic rationale guiding make-buy              decisions    2.0 Develop Strategic Plan2.1 Develop detailed knowledge of lean principles for building      lean supplier networks2.2 Develop basic elements of strategic plan to achieve vision      2.2.1  Define goals, objectives and metrics      2.2.2  Perform strategic map of value creation processes:                Identify own core competencies & complementary                supplier capabilities (high-level; “as-is”; “to-be”; gap                analysis; define compelling case for change)      2.2.3  Define make-buy decision process      2.2.4  Design supplier network to optimize dynamic                competitive advantage      2.2.5  Define major change strategies (e.g., strategic                alliances; e-business; knowledge management;                fostering innovation)2.3 Define principal roles and responsibilities, relationships,      governing principles and rules of behavior2.4 Define infrastructure support requirements2.5 Develop resource plan for executing strategic plan5.0 Implement Lean Initiatives1.0 Define Vision 3.0 Establish Lean Infrastructure3.1 Refine infrastructure support requirements      3.1.1  Define key elements, interfaces and coordination                & control mechanisms      3.1.2  Define and create organizational structure and                process3.2 Define requirements and create implementation plan      3.2.1  Define key elements of the implementation plan      3.2.2  Create implementation plan (enterprise, site,                program)3.3 Develop supporting infrastructure systems      3.3.1  Define data/information  requirements      3.3.2  Define information technology (IT) & information                systems (IS) requirements      3.3.3  Build IT/IS system and communication network3.4 Define training requirements and develop training tools      3.4.1  Research and select lean tools      3.4.2  Develop training modules & tools (for internal &               external organizations)6.0 Strive for Continuous      Improvement6.1 Modify and refine implementation strategy      based on supplier network performance      6.1.1  Measure progress (metrics)      6.1.2  Report metrics (ROI, “ lean dividend”)      6.1.3  Define areas for further improvement      6.1.4  Recognize achievements      6.1.5  Transfer ownership of lean process to                suppliers6.2 Nurture the process of continuous improvement      (internal, external)6.3 Capture, adopt and share new knowledge6.4 Communicate needed changes in vision,      strategy, support infrastructure, implementation      plan, and implementation strategy© Massachusetts Institute of Technology, 2001NOTE: Based on September 21-22, 2000meeting of the Steering Group of the LeanAerospace Initiative (LAI) Supplier NetworksResearch Team; work-in-progress; for reviewand comment only within the Lean AerospaceInitiative (LAI)• Further refine & develop the FRAMEWORK &ROADMAP modules; develop GUIDEBOOK;integrate toolset  (est. Aug 01)• Beta test the integrated toolset -- host companiesusing the toolset and providing feedback on itsusefulness (est. Sept-Oct 01)• Complete and provide Beta Version of the toolset(est. Dec 01- Jan 02)KB013001 - 12 © 2001 Massachusetts Institute of Technology“Straw-Man” Schedule(for discussion)

Progress Report: Implementation Toolset For Building Lean Supplier Networks

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Progress Report: Implementation Toolset For Building Lean Supplier Networks

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