Elements of Excellence

Transcription

1 MFC Excellence - 1 Elements of Excellence Managing With Analytics Harnessing Balanced Scorecard (The Enterprise Performance Index) Steve Sessions Director, Supplier Quality Element of Excellence - EPI Enterprise Performance Index Business Scorecard Instrumentation Flags Trends Adaptable to Or Businesses Complement to Tactical Techniques Discriminator in Industry Instrumentation Set Higher Understanding of Business Relationships Prediction Oriented Tool Information for Executive Leaders to Drive Strategy and Results MFC Excellence - 2 Metric Driven Results A Metrics Journey PMT: Performance Management Teams: Based Multi-functional Manufacturing Teams Mixed Focus ELC: LMMFC Leadership Reviews of Performance Measures LM21 Lockheed Martin in 21 st Century: Lean Six Sigma Deployment Performance Management Teams: Supply Chain Based PMTs Next Generation of ELC Enterprise Performance Index: Balanced Scorecard Analysis The Journey: Tactical to Focus on Measures MFC Excellence - 3

2 The Company Work System and Work Processes Work Systems Plan MFC President Execute Plan Execute Objective Long Range Plan Allocate The Business Plan Design Acquire VP Business ment VP Technical Operations VP Materials VP ion Operations Work Processes Multiple VPs of Lines Ensure Quality Excellence Provide Finance and IT Provide Facilities and ESH Provide Human Provide Legal and Security VP Quality Assurance VP Finance & IT VP Human VP Legal Dir Ethics Leadership Structure Mirrors Company Work Systems and Value Stream MFC Excellence - 4 Metric Driven Results Metric Alignment Quarterly Next Generation: Analysis of Work System Performance and Trending Executive Review of Tiered Work Systems and Processes Monthly Team and Level Reviews Daily / Weekly Tier 1: Work Process Business Plan Tier 2: Work Process Multiple Measures Hours Per Unit All s Defects Per Unit All s Tier 3: Work Process Measure Hours Per Unit X Defects Per Unit Y Tier 4/5: PMT Team Measures Hours Assembly Line A Rejects Assembly Line B Bottom to Top Metric Alignment Roll-up to Balanced Scorecard MFC Excellence - 5 Metric Driven Results Metric Alignment Business Rhythm Teams: Daily / Weekly Executive Leadership Council: Monthly Senior Executive Leadership Council: Quarterly Tactical and Reviews Robust Business Rhythm And Tiered Focus Achieves Results MFC Excellence - 6

3 Plan Execute Objective Long Range Plan Allocate The Business Rigorous Management Process Produces Sustained Market Growth Actual Orders $ Plan Exceeded Orders Plans in Volatile Market MFC Excellence - 7 Plan Execute Plan Design Acquire Cumulative Cost Savings Due to Robust Design Process and Resulting First Test Success 100% First Test Design Success Over 12+ Years MFC Excellence - 8 Plan Execute Plan Design Acquire On Time Percentage Supplier Parts Delivered World Class Supply Chain Performance While Increasing Procured Volume MFC Excellence - 9

4 Plan Execute Plan Design Acquire Affordability Through Continuous Learning & Improvement 1,000 1, Operational Performance Improvement Improvement ($) ($) Number of Improvement Events Number of Improvement Events Total Events Annual Cost Savings (Reduction and Avoidance) Cost Reduction 0 Identification of Opportunities Increase to Maintain Steady Cost Improvement MFC Excellence - 10 Plan Execute Plan Design Acquire Return On Investment Substantially Exceeds Industry Benchmarks MFC Excellence - 11 Plan Execute Effective Metric Instrumentation and Leadership Enable Informed Decisions Throughout All of Work Systems and Work Processes 4 Exceptional 3 Satisfactory Positive Customer Satisfaction Yields Increased Follow On Business Customer Assessment MFC >6% above DOD Industry $7 $6 Follow On Orders ($) $5 $4 $ $2 Customer Satisfaction Improving With Orders and Financial Growth MFC Excellence - 12

5 EPI Metric System - Hierarchy Tier I Poor Marginal Enterprise Score = 834 Acceptable Exceptional Over Managed 834 Tier 2 Tier I.I Talent Readiness Index (+/- 100 Pts) +72 Execution Process Index Scorecard Process Index Scorecard 738 Composite Score % % Monitors, Process and Human Capital Performance MFC Excellence - 13 EPI Metric System - Hierarchy Tier 2 Tier Process Hours Hours Per Index Per Unit Scorecard Unit Index A Scorecard Comprised of The Resultant Scores for Each Major Work System Including Key Functions Tier 3 Tier Tier 5 Hours Per Unit Index 699 Hours Per Unit A 120 Scorecard Comprised of Key Indicators of A Work Process Scorecard For a Group of Work Process Measures Work Process Measure Each Tier Two Index Matches A Value Stream and An Executive Leader MFC Excellence - 14 EPI Metric System - Mechanics Raw Work Process Measure Value Level Weight Score Hours Per Unit (HPU) Index HPU Plan to Actual Line A 80% 85% 90% 92% 94% 96% 98% 100% 105% 120% 91% % HPU Plan to Actual Line B 80% 85% 90% 92% 94% 96% 98% 100% 105% 120% 98% % 315 HPU Plan to Actual Line C 80% 85% 90% 92% 94% 96% 98% 100% 105% 120% 99.5% % 116 HPU Plan to Actual Line D 80% 85% 90% 92% 94% 96% 98% 100% 105% 120% 107% % Identify Key Work Process Being Measured 2. Identify Work Process Key Measure 3 3. Identify A Scale Which s The Expected Range of Performance Spread Scale from Poor Performance(100) to Perfection (1000). Where Possible Use Normalized Indicators Scales Do Not Have To Be Linear 4. Identify A Relative Importance or Weight For Each Metric Base Off Long Range Plan and Importance to Business Future 5. Record and Plot Actual Values 6. Identify Raw Value s Level Based on Its Corresponding Scale 7. Multiply Level and Weight to Get a Relative Score for Each Measure 8. Sum Scores To Obtain an Index Score for The Key Measure A Structured Scorecard to Align, Rank and Roll Up Metric Performance for Rapid Consumption MFC Excellence - 15

6 Enterprise Work System Objectives, LRP, Allocate, Business Provide Finance and IT Provide Human Business Process Count of s with >0.8 Correlation Between Metrics TCPI SPI Pgo EPI Metric System - Mechanics Plan & Work Execute Systems Raw Work Systems Measure Level Weight Score Value Enterprise Work System Enterprise Index ALL Business Process Index % 319 ALL Execution Index % 443 ALL Talent Readiness Index Raw N/A 72 Work Process Measure Level Weight Score Value Performance Index Business ment Index % 107 Design Technical Operations Index % 80 Acquire Materials Index % 100 ion Operations Index % 64 Mission Success Index % 137 Finance Index % 110 Human Index % 106 Ensure Quality Excellence Quality Index % 94 Tier 4 CPI Escapes SPI First Delivery to Lead Time Ratio Cash Flow vs. Plan Contract On Time Deliveries EBIT vs. Plan OCM: Orders Risk Mfg Losses Pgo CSR Conservatism EAC Stability RAM% Orders Backlog IOP Perfrmance Margin TCPI OCM: Orders vs. Plan PO's Late to Place DPU Aging Nonconformances SFR 4 1 Areas where metric linkage is now affirmed / created Areas where metric linkage was already derived or are see mingly unrelated CPI RAM% SFR Tier 2 Tier 1 Tier 3 Scores Roll Up Into Parent Indices MFC Excellence - 16 EPI Metric System Statistical Flagging?? Flag Excessive Variation: Identify Non-Robust Processes Identify Extreme Situations >? Flag Trending: Identify Turns In The Data To Drive Tactical and Shifts Get Ahead Of Or Leverage Drastic Change? Flag Poor Performance: Flag All Processes With Sub-Par Performance Drive Shifts Scores Flagged To Identify Items Of Interest MFC Excellence - 17 EPI Metric System Correlation / Prediction Plan Execute Customer Impact!!! Objective Long Range Plan Allocate The Business Plan Design Acquire Contract Negotiations Delay, Contract Awarded Inside Lead Time Parts Purchased Inside of Extensive Rework of Parts Lead Time Are Expedited Required for Supplier And Many Arrive Late Issues and Delays Ensure Quality Excellence Provide Finance and IT Provide Facilities and ESH Provide Human Supplier Parts Exhibit Financial Performance Increased Reject Rates Begins to Sway Due To Increased Rework of Supplied Hardware Utilize Raw Values To Perform Regressions Identify Dependencies in Work Systems and Work Process Relationships Establish Time Phasing of Upstream Process and Performance Impacts to Predict Impact Evaluate Effectiveness of Strategy Changes Calculate Control Sensitivity of Process Identify Processes Needing Better Controls / Design Provide Legal and Security TE Deliveries OCM: Orders Risk Mfg Losses OCM: Orders vs. Plan Sales vs. Plan matics Business Management IOP Performance Margin TE Health Index TE Uptime TE Response Time First Delivery to Lead Time Ratio Orders Backlog EBIT vs. Plan Escapes Supplier Parts with Potential Impact to IOP PO's Late to Place Parts Late to IOP Setback Line Gap Risk Manpower EAC Stability MR's Late to Release SPCR Curve Correlation Can Lead To Time Phased Prediction of Upstream Results MFC Excellence - 18

7 EPI Metric System Best Practices Identify Stakeholders for Your Work Systems and Processes Drive Ownership to Metrics Drive Ownership to RESULTS Have Stakeholders Identify 5-6 Key Work Process Metrics Focus On Normalized Metrics Identify Meaningful Scales Ensure Scale Reflects Reality Scale Should Drive Metric Toward Perfection (1000 Score) Weight Metrics and Work Processes Based On Their Importance to Company s Long Range and Plans Adopt a Frequent and Meaningful Business Rhythm Adopt Meaningful and Challenging Goals Set and Tactical Direction Your Company Can Utilize Analytics To Help Drive Strategy And Results MFC Excellence - 19 Final Thoughts EPI And Malcolm Baldrige Malcolm Baldrige Model provides framework Measurement of system that includes focus on Leadership, Planning, Workforce, Operations, with Results to Customer Balanced Scorecards provide Measurement Methodology Identifies measures and goals for each Key Work Process Identifies Ownership and Accountability Enterprise Performance Index provides Analysis Analyzes Work Systems with focus on Business Long Range Plan Provides Knowledge to predict and identify trends early to drive Results MFC Fundamental Business Principle: Business is not objective it is result. Performance is our objective. MFC Excellence - 20