Research Sponsored By LAI LESAT The Lean Enterprise Self Assessment Tool November 11, 2002 Professor Debbie Nightingale Nightingale - 2 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Overview ?Background ?LESAT Development Process ?LESAT Architecture and Practices ?Assessment Process ?LESAT Research Results Nightingale - 3 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean TTL Roadmaps LEM Principles & Practices LESAT Self Assessment Self Assessment Assessment LAI Enterprise Tool Triad Best Practices Imp l e m entation Nightingale - 4 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Lean Enterprise Model Practices and Benchmark Data Supporting Practices(~300) Enabling Practices (~ 60) Metrics -Data - Barriers - Interactions Enterprise Level Metrics Meta-Principles/Enterprise Principles Overarching Practices Develop Relationships Based on Mutual Trust & Commitment Continuously Focus on the Customer Nurture a Learning Environment Ensure Process Capability and Maturation Assure Seamless Information Flow Optimize Capability & Utilization of People Identify & Optimize Enterprise Flow Implement Integrated Product & Process Development Maintain Challenge of Existing Processes Make Decisions at Lowest Possible Level Promote Lean Leadership at all Levels Maximize Stability in a Changing Environment Metrics - Barriers - Interactions Data Sheets (~225) Internet Links (~600) LEM Nightingale - 5 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean TTL Roadmaps LEM Principles & Practices LESAT Self Assessment Self Assessment Assessment LAI Enterprise Tool Triad Best Practices Imp l e m entation Nightingale - 6 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Long Term Cycle Short Term Cycle Entry/Re-entry Cycle Create & Refine Transformation Plan Focus on Continuous Improvement Implement Lean Initiatives Adopt Lean Paradigm Enterprise Strategic Planning Decision to Pursue Enterprise Transformation Focus on the Value Stream Initial Lean Vision Detailed Lean Vision Lean Transformation Framework Develop Lean Structure & Behavior Enterprise Level Transformation Plan Outcomes on Enterprise Metrics Environmental Corrective Action Indicators Detailed Corrective Action Indicators + + Enterprise Transition To Lean (TTL) Roadmap Nightingale - 7 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Entry/Re-entry Cycle Focus on the Value Stream Initial Lean Vision Short Term Cycle Create & Refine Transformation Plan Lean Transformation Framework Adopt Lean Paradigm Enterprise Strategic Planning Focus on Continuous Improvement Outcomes on Enterprise Metrics Implement Lean Initiatives Enterprise Level Transformation Plan Develop Lean Structure & Behavior Detailed Lean Vision Environmental Corrective Action Indicators Detailed Corrective Action Indicators Decision to Pursue Enterprise Transformation ?Build Vision ?Convey Urgency ?Foster Lean Learning ?Make the Commitment ?Obtain Senior Mgmt. Buy-in ?Map Value Stream ?Internalize Vision ?Set Goals & Metrics ?Identify & Involve Key Stakeholders ?Organize for Lean Implementation ?Identify & Empower Change Agents ?Align Incentives ?Adapt Structure & Systems ?Identify & Prioritize Activities ?Commit Resources ?Provide Education & Training ?Monitor Lean Progress ?Nurture the Process ?Refine the Plan ?Capture & Adopt New Knowledge ?Develop Detailed Plans ?Implement Lean Activities Enterprise Level Roadmap + + Long Term Cycle Nightingale - 8 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean TTL Roadmaps LEM Principles & Practices LESAT Self Assessment Self Assessment Assessment LAI Enterprise Tool Triad Best Practices Imp l e m entation Nightingale - 9 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean What Is LESAT? ? A tool for self-assessing the present state of “leanness” of an enterprise and its readiness to change ? Comprised of: ? Capability maturity model for enterprise leadership, life cycle and enabling processes ? Supporting materials: (Facilitator’s Guide, Glossary, etc.) Source: Aerospace Initiative, MIT ? 2001 Lean Nightingale - 10 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean How Do I Assess My Progress? ? Enterprise TTL application highlighted need for assessment tool ? Lean Enterprise Self Assessment Tool (LESAT) developed by joint industry / government / MIT team in collaboration with UK LAI ? LESAT supports both ? “As-Is” Analysis AND ? “To-Be” Vision ? Targeted at Enterprise Leadership Team Nightingale - 11 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean LESAT Tool Requirements (Survey of LAI Stakeholders) ? Simple, easy to use by enterprise leadership ? Focus on lean attributes ? Alignment with business performance planning (goals and results) ? Provides guidance for “next steps” ? Gap analysis capability ? Ability to accommodate both single and aligned organizations (teaming, partnerships, suppliers) within an enterprise Nightingale - 12 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Life Cycle Processes Enabling Infrastructure Processes Enterprise Leadership Processes Process Architecture View of Lean Enterprise Source: Aerospace Initiative, MIT ? 2001 Lean Nightingale - 13 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean nullBusiness Acquisition and Program Management nullRequirements Definition nullProduct/Process Development nullSupply Chain Management nullProduction nullDistribution and Support nullFinance nullInformation Technology nullHuman Resources nullQuality Assurance nullFacilities and Services nullEnvironment, Health and Safety nullStrategic Planning nullBusiness Models nullManaging Business Growth nullStrategic Partnering nullOrganizational Structure and Integration nullTransformation Management Life Cycle Processes Enabling Infrastructure Processes Enterprise Leadership Processes Lean Enterprise Process Architecture Source: Aerospace Initiative, MIT ? 2001 Lean Nightingale - 14 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Section I Section II Section III Lean Transformation / Leadership Life Cycle Processes Enabling Infrastructure Processes Life Cycle Processes Enabling Infrastructure Processes Enterprise Leadership Processes LESAT Structure is Consistent with Enterprise Architecture Source: Aerospace Initiative, MIT ? 2001 Lean Nightingale - 15 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean LESAT Maturity Matrix Template Source: erospace Initiative, ? 2001 Statement describing world-class behavior for this lean practice Level 5Level 4Level 3Level 2 Outcomes and lean behaviors that an enterprise will exhibit as it proceeds on its Lean transformation Lean Indicators Inputs to plans of action to leverage opportunities or to move to the desired level of capabilityOpportunities Supporting data utilized in assessing the current capability level of the Enterprise on this lean practice Evidence Statement describing little awareness of this lean practice A specific lean practice associated with this Group Sound bit phrase Level 1 Capability Levels Lean Practices LP# 1.0 Generic questions regarding the performance of the enterprise relative to this Group of practices Diagnostic Questions Section, Group # and Group Name: this Group number. roup is one of the Primary Activities from the Transition-to-Lean (TTL) Roadmap C D C D C D C D C D U.S. and U.K. Lean A Brief description of In Section I, the G Nightingale - 16 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Capability Maturity Levels Level 1 Some awareness of this practice; sporadic improvement activities may be underway in a few areas. Level 2 Level 3 Level 4 Level 5 General awareness; informal approach deployed in a few areas with varying degrees of effectiveness and sustainment. A systematic approach/methodology deployed in varying stages across most areas; facilitated with metrics; good sustainment. On-going refinement and continuous improvement across the enterprise; improvement gains are sustained. Exceptional, well-defined, innovative approach is fully deployed across the extended enterprise (across internal and external value streams); recognized as best practice. Source: erospace Initiative, ? 2001 U.S. and U.K. Lean A Nightingale - 17 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean LESAT Architecture Section I Lean Transformation / Leadership Section II Life Cycle Processes Section III Enabling Infrastructure Processes Nightingale - 18 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean LESAT Section I ?Practices directly linked to enterprise Transition to Lean Model (TTL) ?Assesses the following elements: ?Strategic integration ?Leadership and commitment ?Value stream analysis and balancing ?Change management ?Structure and systems ?Lean transformation planning, execution and monitoring ++ ++ Section I: Lean Transformation/Leadership Nightingale - 19 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Adopt Lean Paradigm Long Term Cycle Short Term Cycle Entry/Re-entry Cycle Create & Refine Transformation Plan Focus on Continuous Improvement Implement Lean Initiatives Enterprise Strategic Planning Decision to Pursue Enterprise Transformation Focus on the Value Stream Initial Lean Vision Detailed Lean Vision Lean Transformation Framework Develop Lean Structure & Behavior Enterprise Level Transformation Plan Outcomes on Enterprise Metrics Environmental Corrective Action Indicators Detailed Corrective Action Indicators + + Enterprise Transition To Lean (TTL) Roadmap Nightingale - 20 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean I.B. Adopt Lean Paradigm Source: erospace Initiative, ? 2001 Stakeholders have internalized the lean vision and are an active part of achieving it. Level 5 Common vision of lean is shared by the extended enterprise. Level 4 Lean vision has been communicated and is understood by most employees. Level 3 Senior leaders adopt common vision of lean. Level 2 ?The role that lean plays in achieving the vision is clearly defined ?The vision has been communicated to all levels and has extensive buy-in by most employees. ?The vision incorporates a new mental model of how the company would act and behave according to lean principles and practices Lean Indicators Opportunities Evidence Senior leaders have varying vision of lean, from none to well-defined. Lean Enterprise Vision New mental model of the enterprise I.B.3. Level 1 Capability Levels Lean Practices LP# 1. Do enterprise leaders and senior managers understand the lean paradigm at the enterprise level? 2. Do all senior leaders and management enthusiastically support a transformation to lean? 3. Has a common vision of lean been communicated throughout the enterprise and within the extended enterprise? 4. Has a compelling case been developed for the Lean transformation? Diagnostic Questions I.B. Adopt Lean Paradigm - Transitioning to lean requires a significant modification to the business model of the enterprise. e that the enterprise leadership understands and buys into the lean paradigm since they will be required to create a vision for doing business, behaving and seeing value in fundamentally different ways. C D C D C D C D C D U.S. and U.K. Lean A It is imperativ Nightingale - 21 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean I.B. Adopt Lean Paradigm Source: erospace Initiative, ? 2001 Stakeholders have internalized the lean vision and are an active part of achieving it. Level 5 Common vision of lean is shared by the extended enterprise. Level 4 Lean vision has been communicated and is understood by most employees. Level 3 Senior leaders adopt common vision of lean. Level 2 ?The role that lean plays in achieving the vision is clearly defined ?The vision has been communicated to all levels and has extensive buy-in by most employees. ?The vision incorporates a new mental model of how the company would act and behave according to lean principles and practices Lean Indicators Opportunities Evidence Senior leaders have varying vision of lean, from none to well-defined. Lean Enterprise Vision New mental model of the enterprise I.B.3. Level 1 Capability Levels Lean Practices LP# 1. Do enterprise leaders and senior managers understand the lean paradigm at the enterprise level? 2. Do all senior leaders and management enthusiastically support a transformation to lean? 3. Has a common vision of lean been communicated throughout the enterprise and within the extended enterprise? 4. Has a compelling case been developed for the Lean transformation? Diagnostic Questions I.B. Adopt Lean Paradigm - Transitioning to lean requires a significant modification to the business model of the enterprise. e that the enterprise leadership understands and buys into the lean paradigm since they will be required to create a vision for doing business, behaving and seeing value in fundamentally different ways. C D C D C D C D C D U.S. and U.K. Lean A It is imperativ Nightingale - 22 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean I.B. Diagnostic Questions ? Do enterprise leader and senior managers understand the lean paradigm at the enterprise level? ? Have all senior managers made a commitment to enthusiastically support a transformation to lean? ? Has a common vision of lean been communicated throughout the enterprise and within the extended enterprise? ? Has a compelling case been developed for the lean transformation? Nightingale - 23 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean I.B. Adopt Lean Paradigm Source: erospace Initiative, ? 2001 Stakeholders have internalized the lean vision and are an active part of achieving it. Level 5 Common vision of lean is shared by the extended enterprise. Level 4 Lean vision has been communicated and is understood by most employees. Level 3 Senior leaders adopt common vision of lean. Level 2 ?The role that lean plays in achieving the vision is clearly defined ?The vision has been communicated to all levels and has extensive buy-in by most employees. ?The vision incorporates a new mental model of how the company would act and behave according to lean principles and practices Lean Indicators Opportunities Evidence Senior leaders have varying vision of lean, from none to well-defined. Lean Enterprise Vision New mental model of the enterprise I.B.3. Level 1 Capability Levels Lean Practices LP# 1. Do enterprise leaders and senior managers understand the lean paradigm at the enterprise level? 2. Do all senior leaders and management enthusiastically support a transformation to lean? 3. Has a common vision of lean been communicated throughout the enterprise and within the extended enterprise? 4. Has a compelling case been developed for the Lean transformation? Diagnostic Questions I.B. Adopt Lean Paradigm - Transitioning to lean requires a significant modification to the business model of the enterprise. e that the enterprise leadership understands and buys into the lean paradigm since they will be required to create a vision for doing business, behaving and seeing value in fundamentally different ways. C D C D C D C D C D U.S. and U.K. Lean A It is imperativ Nightingale - 24 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean LESAT Section I: Level 1 I.B.3 Lean Enterprise Vision - new mental model of the enterprise Senior leaders have varying visions of lean, from none to well-defined Level 2 Level 3 Level 4 Level 5 Senior leaders adopt common vision of lean Lean vision has been communicated and is understood by most employees Common vision of lean is shared by the extended enterprise Stakeholders have internalized the lean vision & are an active part of achieving it Source: erospace Initiative, ? 2001 Example U.S. and U.K. Lean A Nightingale - 25 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Lean Indicators ? The role that lean plays in achieving the vision is clearly defined ? The vision has been communicated to all levels and has extensive buy-in by most employees ? The vision incorporates a new mental model of how the company would act and behave according to lean principles and practices Nightingale - 26 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean LESAT Architecture Section I Lean Transformation / Leadership Section II Life Cycle Processes Section III Enabling Infrastructure Processes Nightingale - 27 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean LESAT Assess: ? Enterprise level core processes ? Acquisition ? Program Management ? Requirements Definition ? Product/Process Development ? Supply Chain Management ? Production ? Distribution and Support ? Key integrative practices Section II: Section II Life Cycle Processes 1 2 3 4 5 6 Nightingale - 28 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean II.C. ct and Process Source: erospace Initiative, ? 2001 Downstream stakeholders’ values in the extended enterprise are quantified and balanced via tradeoffs, as a continuous part of the process. Level 5 Priorities of downstream stakeholders are quantified as early as possible in design, and used for process evaluation and improvement. Level 4 Multi-functional teams include some downstream disciplines and key suppliers. Level 3 Manufacturing and assembly issues are considered earlier in projects, but in ad hoc manner. Supplier and cost considerations are limited. Level 2 ?There is early consideration and incorporation of downstream stakeholders issues throughout design development ?The scope of considerations integrated into designs has been extended to include manufacturing, assembly, serviceability and cost implications ?Products are easier to produce and have lower life-cycle costs Lean Indicators (Examples) Opportunities Evidence Manufacturing issues are considered late in design. Incorporate Downstream Stakeholder Values (Manufacturing, Support, etc.) into Products and Processes Understanding downstream stakeholders allows value to flow seamlessly to customer II.C.2 Level 1 Capability Levels Lean PracticesLP# . Is the product development process formalized and understood? . Are customers and other lifecycle stakeholders regularly involved in product and process development? . Are downstream stakeholder issues in design and development considered and incorporated as early as possible in the process? . Have most of the unnecessary iterations in the development cycle been removed? . Has the development cycle been simplified and aligned to the critical path? . Are products and processes being developed concurrently? Diagnostic Questions II. C. Develop Product and Process - Product and process design decisions must be based upon value quantifications and tradeoffs that incorporate inputs from affected stakeholders. C D C D C D C D C D Develop Produ U.S. and U.K. Lean A 1 2 3 4 5 6 Nightingale - 29 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean II.C. ct and Process Source: erospace Initiative, ? 2001 Downstream stakeholders’ values in the extended enterprise are quantified and balanced via tradeoffs, as a continuous part of the process. Level 5 Priorities of downstream stakeholders are quantified as early as possible in design, and used for process evaluation and improvement. Level 4 Multi-functional teams include some downstream disciplines and key suppliers. Level 3 Manufacturing and assembly issues are considered earlier in projects, but in ad hoc manner. Supplier and cost considerations are limited. Level 2 ?There is early consideration and incorporation of downstream stakeholders issues throughout design development ?The scope of considerations integrated into designs has been extended to include manufacturing, assembly, serviceability and cost implications ?Products are easier to produce and have lower life-cycle costs Lean Indicators (Examples) Opportunities Evidence Manufacturing issues are considered late in design. Incorporate Downstream Stakeholder Values (Manufacturing, Support, etc.) into Products and Processes Understanding downstream stakeholders allows value to flow seamlessly to customer II.C.2 Level 1 Capability Levels Lean PracticesLP# . Is the product development process formalized and understood? . Are customers and other lifecycle stakeholders regularly involved in product and process development? . Are downstream stakeholder issues in design and development considered and incorporated as early as possible in the process? . Have most of the unnecessary iterations in the development cycle been removed? . Has the development cycle been simplified and aligned to the critical path? . Are products and processes being developed concurrently? Diagnostic Questions II. C. Develop Product and Process - Product and process design decisions must be based upon value quantifications and tradeoffs that incorporate inputs from affected stakeholders. C D C D C D C D C D Develop Produ U.S. and U.K. Lean A Nightingale - 30 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Diagnostic Questions ? Is the product development process formalized and understood? ? Are customers and other lifecycle stakeholders regularly involved in product and process development? ? Are downstream stakeholder issues in design and development considered and incorporated as early as possible in the process? ? Have most of the unnecessary iterations in the development cycle been removed? ? Has the development cycle been simplified and aligned to the critical path? ? Are products and processes being developed concurrently? 1 2 3 4 5 6 Nightingale - 31 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean II.C. ct and Process Source: erospace Initiative, ? 2001 Downstream stakeholders’ values in the extended enterprise are quantified and balanced via tradeoffs, as a continuous part of the process. Level 5 Priorities of downstream stakeholders are quantified as early as possible in design, and used for process evaluation and improvement. Level 4 Multi-functional teams include some downstream disciplines and key suppliers. Level 3 Manufacturing and assembly issues are considered earlier in projects, but in ad hoc manner. Supplier and cost considerations are limited. Level 2 ?There is early consideration and incorporation of downstream stakeholders issues throughout design development ?The scope of considerations integrated into designs has been extended to include manufacturing, assembly, serviceability and cost implications ?Products are easier to produce and have lower life-cycle costs Lean Indicators (Examples) Opportunities Evidence Manufacturing issues are considered late in design. Incorporate Downstream Stakeholder Values (Manufacturing, Support, etc.) into Products and Processes Understanding downstream stakeholders allows value to flow seamlessly to customer II.C.2 Level 1 Capability Levels Lean PracticesLP# . Is the product development process formalized and understood? . Are customers and other lifecycle stakeholders regularly involved in product and process development? . Are downstream stakeholder issues in design and development considered and incorporated as early as possible in the process? . Have most of the unnecessary iterations in the development cycle been removed? . Has the development cycle been simplified and aligned to the critical path? . Are products and processes being developed concurrently? Diagnostic Questions II. C. Develop Product and Process - Product and process design decisions must be based upon value quantifications and tradeoffs that incorporate inputs from affected stakeholders. C D C D C D C D C D Develop Produ U.S. and U.K. Lean A Nightingale - 32 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Enterprise Level Section II: Level 1 Manufacturing issues are considered late in design Level 2 Level 3 Level 4 Level 5 Manufacturing & assembly issues are considered earlier in projects, but in an ad hoc manner. & cost considerations are limited Multi-functional teams include some downstream disciplines and key suppliers Priorities of downstream stakeholders are quantified as early as possible in design, and used for process evaluation and improvement Downstream stakeholders’ values in the extended enterprise are quantified, and balanced via tradeoffs, as a continuous part of the process II.C.2 Incorporate Downstream Stakeholder Values (Manufacturing, Support, etc.) into Products & Processes - Understanding downstream stakeholders allows value to flow seamlessly to customer Example Supplier Nightingale - 33 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Lean Indicators ? There is early consideration and incorporation of downstream stakeholder issues throughout design development ? The scope of considerations integrated into designs has been extended to include manufacturing, assembly, serviceability and cost considerations ? Products are easier to produce and have lower life- cycle costs Nightingale - 34 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean LESAT Architecture Section I Lean Transformation / Leadership Section II Life Cycle Processes Section III Enabling Infrastructure Processes Nightingale - 35 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean LESAT Section III Lean Organizational Enablers ?Finance ?Information Technology ?Human Resources ?Environmental Health & Safety Section III: Lean Process Enablers ?Standardized processes ?Common tools and systems ?Variation reduction Enabling Infrastructure 1 2 3 4 5 6 Nightingale - 36 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean III.A. Source: erospace Initiative, ? 2001 Financial systems provide seamless information exchange across the extended enterprise, with emphasis on value creation for all stakeholders. Level 5 Financial system scope is expanded to integrate with non-traditional measures of value creation (e.g., intellectual capital, balanced scorecard, etc.). Level 4 Finance system is overhauled to provide data and financial information to support and enable a lean transformation at any level. Level 3 Initial efforts are underway to adapt or modify systems to compensate for the inadequacies of the formal financial system. Level 2 ?Financial measures that conflict with lean activity are no longer used to measure progress and performance. ?The financial system handles a balanced set of financial and non-financial measures to assist decision-making. ?The financial system has been overhauled to ensure fast and efficient processing of information as required. Lean Indicators Opportunities Evidence Finance system provides basic balance sheet and cost accounting data; there is little awareness and exploration of broader support roles for finance. Financial System Supports Lean Transformation Lean requires appropriate financial data III.A.1 Level 1 Capability Levels Lean PracticesLP# . Do the finance and accounting measures support the implementation of lean? . How well have the financial and accounting systems been integrated with non-financial measures of value creation? . Can stakeholders retrieve financial information as required? . Are human resource practices reviewed to assure that intellectual capital matches process needs? . Are the information technology systems compatible with stakeholder communications and analysis needs? . Do processes created the least amount of environmental hazards practical? Diagnostic Questions III.A. zation Enablers - The support units of an enterprise infrastructure must support the implementation of lean principles, practices and behavior. C D C D C D C D C D Lean Organizational Enablers U.S. and U.K. Lean A Lean Organi 1 2 3 4 5 6 Nightingale - 37 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean III.A. Source: erospace Initiative, ? 2001 Financial systems provide seamless information exchange across the extended enterprise, with emphasis on value creation for all stakeholders. Level 5 Financial system scope is expanded to integrate with non-traditional measures of value creation (e.g., intellectual capital, balanced scorecard, etc.). Level 4 Finance system is overhauled to provide data and financial information to support and enable a lean transformation at any level. Level 3 Initial efforts are underway to adapt or modify systems to compensate for the inadequacies of the formal financial system. Level 2 ?Financial measures that conflict with lean activity are no longer used to measure progress and performance. ?The financial system handles a balanced set of financial and non-financial measures to assist decision-making. ?The financial system has been overhauled to ensure fast and efficient processing of information as required. Lean Indicators Opportunities Evidence Finance system provides basic balance sheet and cost accounting data; there is little awareness and exploration of broader support roles for finance. Financial System Supports Lean Transformation Lean requires appropriate financial data III.A.1 Level 1 Capability Levels Lean PracticesLP# . Do the finance and accounting measures support the implementation of lean? . How well have the financial and accounting systems been integrated with non-financial measures of value creation? . Can stakeholders retrieve financial information as required? . Are human resource practices reviewed to assure that intellectual capital matches process needs? . Are the information technology systems compatible with stakeholder communications and analysis needs? . Do processes created the least amount of environmental hazards practical? Diagnostic Questions III.A. zation Enablers - The support units of an enterprise infrastructure must support the implementation of lean principles, practices and behavior. C D C D C D C D C D Lean Organizational Enablers U.S. and U.K. Lean A Lean Organi Nightingale - 38 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Section III. ? Do the finance and accounting measures support the implementation of lean? ? How well have the financial and accounting systems been integrated with non-financial measures of value creation? ? Can stakeholders retrieve financial information as required? ? Are human resource practices reviewed to assure that intellectual capital matches process needs? ? Are the information technology systems compatible with stakeholder communications and analysis needs? ? Do processes create the least amount of environmental hazards practical? Diagnostic Questions 1 2 3 4 5 6 Nightingale - 39 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean III.A. Source: erospace Initiative, ? 2001 Financial systems provide seamless information exchange across the extended enterprise, with emphasis on value creation for all stakeholders. Level 5 Financial system scope is expanded to integrate with non-traditional measures of value creation (e.g., intellectual capital, balanced scorecard, etc.). Level 4 Finance system is overhauled to provide data and financial information to support and enable a lean transformation at any level. Level 3 Initial efforts are underway to adapt or modify systems to compensate for the inadequacies of the formal financial system. Level 2 ?Financial measures that conflict with lean activity are no longer used to measure progress and performance. ?The financial system handles a balanced set of financial and non-financial measures to assist decision-making. ?The financial system has been overhauled to ensure fast and efficient processing of information as required. Lean Indicators Opportunities Evidence Finance system provides basic balance sheet and cost accounting data; there is little awareness and exploration of broader support roles for finance. Financial System Supports Lean Transformation Lean requires appropriate financial data III.A.1 Level 1 Capability Levels Lean PracticesLP# . Do the finance and accounting measures support the implementation of lean? . How well have the financial and accounting systems been integrated with non-financial measures of value creation? . Can stakeholders retrieve financial information as required? . Are human resource practices reviewed to assure that intellectual capital matches process needs? . Are the information technology systems compatible with stakeholder communications and analysis needs? . Do processes created the least amount of environmental hazards practical? Diagnostic Questions III.A. zation Enablers - The support units of an enterprise infrastructure must support the implementation of lean principles, practices and behavior. C D C D C D C D C D Lean Organizational Enablers U.S. and U.K. Lean A Lean Organi Nightingale - 40 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Enterprise Level Section III: Level 1 III.A.1 Lean requires accurate assessment of value stream activities Finance system provides basic balance sheet and cost accounting data; there is little awareness and exploration of broader support roles for finance. Level 2 Level 3 Level 4 Level 5 Initial efforts are underway to adapt or modify systems to compensate for the inadequacies of the formal financial system. Finance system is overhauled to provide data and financial information to support and enable a lean transformation at any level. Financial system scope is expanded to integrate with non-traditional measures of value creation (e.g., intellectual capital, balanced scorecard, etc.). Financial systems provide seamless information exchange across the extended enterprise, with emphasis on value creation for all stakeholders. Example Financial system supports lean transformation - Nightingale - 41 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Lean Indicators ? Financial measures that conflict with lean activity are no longer used to measure progress and performance. ? The financial system handles a balanced set of financial and non-financial measures to assist decision-making. ? The financial system has been overhauled to ensure fast and efficient processing of information as required. ? Financial and performance measurement data can be accessed as needed in user-defined format. ? Financial information can be extrapolated to forecast outcomes. ? System provides up to date information on request and rationalizes information no longer used. Nightingale - 42 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean LESAT ? Introductory Presentation ? LESAT Matrices & Facilitator’s Guide ? TTL Roadmap & Guide ? Summary Score Calculator ? Glossary of Terms ++ ++ Supporting Materials Nightingale - 43 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Suggested Methodology for Employing LESAT LESAT Lean Journey Step 1: Facilitated meeting to introduce tool. Enterprise leader champions Step 2: Enterprise leaders and LESAT assessment Step 3: determine present maturity level Step 4: Leadership determines desired level and measures gap Step 5: Develop action plan and prioritize resources staff conduct Leadership reconvenes to jointly Nightingale - 44 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Summary Form Example LESAT Enterprise Self-Assessment Tool (LESAT) Section I - Lean Tra nsformation/Leadership Process Definition: Develop and deploy lean implementation plans throughout the enterprise leading to (1)- long-term sustainability, (2)- acquiring competitive advantage and (3) satisfaction of stakeholders. Capability Level TTL Link Lean Practice Lean Characteristic Current Desired I.A.1 - Integration of Lean in strategic planning process Lean impacts growth, profitability and market penetration I.A.2 - Focus on customer value Customers pull value from enterprise value stream I.A.3 - Leveraging the extended enterprise Value stream extends from customer through the enterprise to suppliers I.A. Enterprise Strategic Planning Average I.B.1 - Learning and education in “Lean” for enterprise leaders “Unlearning” the old, learning the new I.B.2 - Senior management commitment Senior management leading it personally I.B.3 - Lean enterprise vision New mental model of the enterprise I.B.4 - A sense of urgency The primary driving force for Lean I.B. Adopt Lean Paradigm Average I.C.1 - Unde rstanding current value stream How we now deliver value to customers I.C.2 - Enterprise flow “Single piece flow” of materials and information I.C.3 - Designing future value stream Value stream to meet the enterprise vision I.C.4 - Performance measures Performance measures drive enterprise behavior I.C. Focus on the Value Stream Average I.D.1 - Enterprise organizational orientation Organize to support value delivery I.D.2 - Relationships based on mutual trust “Win-win” vs. “we-they” I.D.3 - Open and timely communications Information exchanged when required I.D.4 - Employee empowerment Decision-making at lowest possible level I.D.5 - Incentive alignment Reward the behavior you want I.D.6 - Innovation encouragement From risk aversion to risk rewarding I.D.7 - Lean change agents The inspiration and drivers of change I.D. Develop Lean Structure and Behavior Average Nightingale - 45 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean 5 4 3 2 1 0 Capability Level LESAT Enterprise Process Areas Current Capability A Company’s Strategic Plan for a Tailored Capability Goal matched to the business objectives. LESAT Desired Score Can be Tailored for Each Process Area Gap Nightingale - 46 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Ground Rules ? Perform the assessment from a total enterprise perspective, NOT individual functional area ? Attempt to assess every practice; leave blank if N/A or if you don’t know ? Scoring the practices ? Each level assumes that lower level criteria are met ? If between levels, score at the lower level ? Note “evidence” for level selected ? Identify opportunities to increase maturity level ? Seek assistance from company facilitator Nightingale - 47 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Schedule LESAT Overview/Kickoff Today _____ Completed assessments to site coordinator TBD _____ Scores compiled and summarized TBD _____ Consolidation/Feedback Session TBD _____ Nightingale - 48 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean LESAT Observations and Insights ? Opportunities for strategic lean improvement actions surfaced from the assessment ? Significant progress in manufacturing or supply chain integration, but are just beginning to address other enterprise processes ? Differences in perception were disclosed between management layers ? VP’s: “We’re highly committed!” ? Director’s: “Doesn’t look like it to us!” ? Lean progress sometimes “plateaued” due to low maturity in Section I (Leadership) and Section III (Enabling Infrastructure) Nightingale - 49 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean LESAT Observations and Insights ? Senior executive leadership, commitment, and involvement are critical success factors in enterprise transformation ? Variability in scores across enterprise were revealing indicator of executive team communication ? Post-assessment discussion of significant value (more than actual scores!) ? The transformation is continuous and takes years, not months ? A more holistic understanding of the role of leadership, core, and enabling processes in delivering value almost always ensued Nightingale - 50 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Relationship Among LESAT Sections Sec I Leadership Sec III Enabling Infrastructure Sec II Lifecycle Processes Leads, Enables Enables State of Enterprise Leanness (Leading Indicators) Leads, Enables C A B Nightingale - 1 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Research Hypotheses Sec I Leadership Sec III Enabling Infrastructure Sec II Lifecycle Processes Leads, Enables Leads, Enables Enables State of Enterprise Leanness Enterprise Performance Measures (Leading Indicators) (Lagging Indicators) Customer Value Financial Value Employee Value Customer focus of Sec II creates Reduced waste in Sec II & III cuts costs and creates Lean in Sec I, II & III creates a more involved and empowered workforce ?Customer Satisfaction Measure ?Quality ?Cost ?Time ?Labor productivity ?Capital productivity ?Investment productivity ?(All as ratio to industry average) ?Enjoyment of Job ?Feeling of Empowerment ?Opinions valued ?Open and clear communications Courtesy of Cory Hallam; Used with Permission Nightingale - 2 ? 2002 Massachusetts Institute of Technology Lean Aerospace Initiative web.mit.edu/lean Results from 18 Enterprises (US and UK) LESAT Section Maturity Correlation y = 0.8246x + 0.5982 R 2 = 0.5102 1 2 3 4 1234 Section I Average Maturity Section II Average Maturity LESAT Section Maturity Correlation y = 0.7995x + 0.4666 R 2 = 0.6029 1 2 3 4 1234 Section I Average Maturity Section III Average Maturity LESAT Section Maturity Correlation y = 0.8751x + 0.4561 R 2 = 0.6093 1 2 3 4 234 Section III Average Maturity Section II Average Maturity Sec I Leadership Sec III Enabling Infrastructure Sec II Lifecycle Processes Leads, Enables Enables State of Enterprise Leanness (Leading Indicators) Leads, Enables C A B CB A Courtesy of Cory Hallam; Used with Permission