Interacting with Operations and Lean Goals

Transcription

1 Interacting with Operations and Lean Goals 2014 Lean Accounting Summit Keith Henderson In this session you will learn how through Lean: Finance Teams improved internal processes Finance provide key metrics to support Lean initiatives Finance and Operations worked together in Lean Efforts Finance provided Product Line P&L s 1

2 My introduction to Lean APICS International Conference in Las Vegas Dr. Shingo Articles and Books The Goal 2004 Lean Accounting Summit Dearborn Sold Out HID Global ACCESS CREDENTIALS ACCESS CONTROL READERS 4 2

3 HID Global North Haven, CT The factory is located in a single leased building in North Haven, CT U.S.A. The facility manufactures custom access cards with various technologies. (Value Add) The location is also a distribution center of HIDG readers and programmable white cards Production/Shipments 18.4 million units Workforce - Total 110 DL 65 Four Value streams 5 Why we chose Lean at HID Global: Need For Change was recognized in 2005 Poor Performance High Scrap Low Morale No growth in a Growing Market Shipments Measure 2005 $1.15M # cards/month 480k On time (12 month average) 69% Lead time (days) 25 Scrap % sales 6.10% Inventory turns 7 Employee Driven Improvements Capability Morale Turnover Cross training Customer satisfaction Few Basic customization Low High Seldom Low 6 3

4 The Results Attribute 2005 Mar 09 Aug 10 Shipments/month $1.15 M $3.3 M # cards/month 480 k 1.7 M On time (12 month average) 69% 95% Lead time (days) overall Scrap % sales 6.10% 2.6% Inventory turns Employee Driven Improvements Few 2,524 Capability Limited to basic customization Extensive Morale Low High Turnover High Low Cross training Seldom Extensive 7 North Haven Value Streams RFID Wiegand Priority Plus Program IoD Identity on Demand RFID IoD Wiegand Readers Wiegand PPP 8 4

5 9 Policy Deployment - Matrix 10 5

6 Policy Deployment Bowler Metrics Wiegand Value Stream PPP Value Stream BSC BSC 11 Balanced Score Cards 12 6

7 Value Stream Income Statements Once we identified the value streams, we recognized the need to publish financial results for each one. We follow Standard Costing reporting requirements from HIDG and Assa Abloy. Support departments had to be allocated due to cross departmental activity and low headcount. We wanted to show global sales results from the efforts of the Value Streams, not just local sales $$. For the first iteration, we replicated the detailed income statement. 13 You can guess the reaction from the value streams leaders. 14 7

8 15 We knew we had to simplify the information. We met with the V/S & OP s leaders Decided on more meaningful categories for expenses Remembering advice from previous Lean Accounting Summit session presenters. Just Try It! Created Plain Language Income Statement 16 8

9 Focus would be on what their teams can affect. Mapped from original I/S format Able to drill down for detail Added run rate % for easier comparisons 17 Communication Meetings Daily 9:15 Meeting (Gemba Boards) Weekly VS report metrics (all ops) Monthly VS PD meeting Bi-Monthly Town Halls Reports Daily scrap, WIP, Inventory Weekly Inventory Monthly All (VS income statement) New Data Warehouse Other metrics reported (Shingo Metrics) Cycle Count Results Labor Cost per unit shipped Overhead cost per unit shipped Asset Productivity Energy Consumption per unit and sales dollar 18 9

10 Month End Close Corporate Finance Office was closing in 3 days (global consolidations) They wanted to get it down to 1 ½ days. First step was to map all processes and interdependencies. We asked each person to make a task list Lists were combined with day and time Master List also showed what tasks were required before another could be started Was put on a share drive for everyone to log in and note when they were complete with a task. 19 Month End Close: Example of Task List 20 10

11 Month End Close The next step was to challenge why a task was needed at all or if it could be performed prior to month end. Payroll entries, Accruals, Depreciations, etc. were moved up to the days before a month end. Increased usage of software enhancements reduced time reqs. Reviews in mid-month help to minimize time spent on day one of the close. 21 Month End Close After a year, we were able to eliminate using the master task list. A/P kaizen for subledger closing reduced processing time from 2 days to 5 hours Number of Journal Entries have been reduced. Communications between departments has improved. Hand-offs have been reduced. We achieved the goal of closing in 1 ½ days

12 Office Kaizen Streamline the Accounts Payable Process We recognized that a lot of effort was being made by the AP personnel. Was all of this effort necessary? How do we find out? A Kaizen event with process mapping was needed 23 A/P Kaizen: Starting the Process We decided to map the process for a 4-way match. We needed to include the entire process which starts with the purchasing department placing a PO to buy an item. The item is received The invoice is received and processed A check is sent to pay for the invoice 24 12

13 A/P Kaizen: Process Mapping After we finished the current state, we then mapped out a leaner process. This reflected our decisions to eliminate waste. 25 The results of the A/P Kaizen 194 Steps in the before process, 139 steps in the after process hours saved per day Understanding of the process across various departments within the company Documentation of the accounts payable process which can be used for training A baseline to start our next improvement event 5S of the accounts payable department to improve quality (sort, straighten, set in order, shine, &standardize) Reduced check runs to minimize down time 26 13

14 Additional Finance Improvements Recognition that processes needed to be standardized globally among all finance offices sharing best practices along with local Kaizen events. Eliminating processing silos that do not share with each other. Kaizen events (Germany, Irvine, Argentina, Payroll - HR) Outsourced cutting checks and have vendors sign up for EFT. Automated manual Payroll processes. Reviewed, modified, and or automated inter-company cross charges and netting payments. A/P implemented Expensables software usage for expense report processing and approvals. 27 M Cubed Technologies M Cubed Technologies, Inc. is a world leader in ceramics and Metal Matrix Composites. M Cubed's advanced material solutions have been designed into the platforms of major semiconductor equipment, LCD, Industrial and Defense-OEMs. Our reaction-bonded silicon carbide and Metal Matrix Composites are used in applications requiring precision machined components. 14

15 M Cubed Technologies Location: Monroe and Newtown, CT 100 Employees (50 IDL, 50 DL) Focus is Silicon Carbide Precision Parts Low Volume, High Mix M Cubed Technologies Coming On Board On their own Lean journey Value Streams Gemba Boards Kanban Systems for Raw Materials No individual Work Orders WO-JITs 15

16 M Cubed Technologies Product Line P&L s By Product Line Costs allocated by wanded hours (DL/IDL) Two Value Streams Current (standard cost) Revenue-Material-Overhead=Gross Margins Prod Prod Total Prod Prod Total A B Chuck VS C D Structure VS Totals Revenue 1,500, ,000 2,100, , ,000 1,050,000 3,150,000 Total Material 320, , , , , , ,000 Total Material as % of Revenue 21.3% 20.8% 21.2% 48.0% 12.5% 21.0% 21.1% Total labor 160,000 58, ,000 16, , , ,000 Total labor as % of Revenue 10.7% 9.7% 10.4% 6.4% 15.0% 13.0% 11.2% Total Mfg Overhead 500, , ,000 76, , ,000 1,038,000 Total Mfg OH as % of Revenue 33.3% 35.0% 33.8% 30.4% 31.5% 31.2% 33.0% Total COGS 980, ,000 1,373, , , ,000 2,057,000 Margins 520, , ,000 38, , ,000 1,093,000 G.P. % 34.7% 34.5% 34.6% 15.2% 41.0% 34.9% 34.7% M Cubed Technologies Future - Plain English P&L s Revenue-Material-Processing-Occupancy=GM Future - Individual Work Orders Need production detail by part Future - Kanbans of WIP 16

17 M Cubed Technologies Metrics Scrap $$ Variable Expense Spending Linearity Overtime Backlog Efficiency/Utilization/Productivity Personal 5-S Minimize paper documents Outlook In Box Use in box as a tickler file Apply 5-S to all in box and sent messages File by category or delete Excel files Folders Organized with consistent nomenclature Use folders within folders to minimize current files viewed Footers with date and file name No guessing as to the most current file in use 17

18 Outlook Past and Present Clean up after the mess Looking forward and giving guidance 36 18