Lean Daily Management – Part I

Performance Improvement Solutions for Your Business Needs May 2010

In this issue

  • Lean Daily Management
  • ISO 27003:2010 ISMS Security Techniques
  • Cutting Customer Service Affects Employees
  • In the News
  • The FDA’s Position on GMP
  • Training Courses
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    Lean Daily Management

    Jim is the GM at a $65 million / 225 employees,
    electronics manufacturing firm in the Southwest (let
    us call it JR manufacturing). In a recent meeting Jim
    described everyday life at work.

    “At JR
    Manufacturing, time flies for everyone. The moment I
    walk in every morning, people come to me with
    different issues, ask my opinion on how to solve them
    and you have no idea what kind of issues are waiting
    for you daily. This is what makes it interesting and
    exciting. I am a hands-on kind of manager and I do get
    involved with everyday issues and my people
    appreciate that.”

    Sounds familiar?

    In fact, this situation, where the senior
    and mid-level managers spend majority of their time
    to put out fires, prevails in more than 90% of the firms
    in the US. This is “normal” to many in those

    Let’s take a look at the significant downsides to
    this style of management.

    a) Jim’s
    recommendations mostly came from prior experience
    with little in-depth analysis of the current issue or data
    to back up his decisions. As a result, the managers
    and shop floor associates don’t
    bother to find a solution to the issue. They were used
    to seeing all the decisions coming from Jim. Jim
    needed to develop new customers and start a new
    product line. However, he was so busy with everyday
    issues; the growth of the business was

    b) No one developed skills for root
    cause and problem solving; everything depends on
    Jim and two of his supervisors (the benefit of thorough
    root cause analysis, documentation and
    communication to standardize did not exist). How
    effective can a hands-on kind of manager be in this
    working environment?

    c) All major key
    issues (such as customer quality issues and on-time
    delivery) are published at the end of the month and
    corrective actions are discussed at that time. Vital
    metrics are now lagging indicators, and could be
    changed to leading indicators if JR Manufacturing
    used Lean Daily Management and Problem Solving

    Lean Daily Management involves looking
    at issues on all key performance indicators from the
    day before, finding the root cause and putting in
    countermeasures. Issues from the day before are
    fresh in the minds of all involved and investigation of
    the problem will be much easier. Management of
    the issues and root cause analysis takes place where
    the issues occur.

    Let’s look at an example of
    a visual dash-board display of performance
    indicators that helps managers to understand
    the “state of the union,” in a timely manner.

    BDC Manufacturing (not a true company-Note: these
    methods can also be applied in a service
    environment) has implemented lean daily
    management to monitor safety, quality, delivery and
    cost (SQDC, as commonly called in a Lean
    organization). At every department (engineering,
    manufacturing, sales) you would find a 5 ft x 8 ft board
    that displays the results of 5 key performance
    indicators – the goals and month-to-date performance,
    results from the day before, pareto of issues, root
    causes and corrective actions to each issues, year-to-
    date performance. Each sheet is color coded. Green,
    means the goals are met and red means goals are
    not met.

    Graphs on daily key performance indicators (KPI’s)
    charts are prepared with green and red marker pens.
    As a manager looking at this dash-board, it is clear
    he/she should spend the time on the most critical
    issue and try to understand what the root causes are.
    The visual dash-boards give a prioritization of issues
    to the management in a 15-second glance.

    When the expectations are established by
    management and employees are expecting questions
    such as “why did this happened and what are you
    doing about it,” they will take ownership of the issues
    and find the solutions. The management is there only
    to counsel and make sure this process works. The
    senior management now can focus their attention to
    strategic issues such as business growth and
    customer relationship.

    An important note, the
    biggest start-up mistakes to good lean daily
    management is, a) putting the blame on people, b)
    people talking about irrelevant issues and prolonging
    the meeting and c) the managers proposing
    solutions. It all takes training and discipline.

    Next month, in our June issue we will
    discuss some good examples of solving problems at
    the department level. Article written by Mathew
    a Senior Consultant of our company. Contact Mathew
    with questions and for any lean daily management

    ISO 27003:2010 ISMS Security Techniques

    ISO 27003:2010 focuses on the critical aspects
    needed for successful design and implementation of
    an Information Security Management System (ISMS) in
    accordance with ISO 27001:2005. The new
    standard gives advice that will be useful for all types of
    security-conscious groups, regardless of their size,
    complexity, and associated risks.

    It describes the process of ISMS specification and
    design from inception to the production of
    implementation plans. It also
    describes the process of obtaining management
    approval to implement an ISMS, defines a project to
    implement an ISMS, and provides
    guidance on how to plan the ISMS project, resulting in
    a final ISMS project implementation plan.

    Implementing an ISMS provides assurance that risks
    to information assets are continuously maintained
    within acceptable information security bounds as
    defined by the organization and its stakeholders.

    ISO 27003:2010 is intended to be used in
    conjunction with ISO 27001:2005 and ISO
    27002:2005. It is not intended to modify and/or reduce
    the requirements specified in either standard.

    You can order ISO 27003:2010 at the ANSI Standards

    Cutting Customer Service Affects Employees

    Of the many actions taken by companies in the past
    few years to bulk up the bottom line and fight the
    recession, cutting internal and external customer
    service could cause the most damage.

    results are according to a new ASQ (American Society
    for Quality) and Metrus Group national survey on how
    a number of recession-survival tactics impacted
    employees. The respondents rated the seriousness
    the various actions had on the three core “people
    equity” factors of employee alignment, engagement
    and capabilities to meet customer expectations.
    Those companies that kept the focus on employees
    outperformed those that did not.

    Process Improvement Has Positive
    People equity was positively impacted by
    those companies that improved processes to fight the
    recession. The article states, “Companies that used
    this tactic reported a strong positive impact on
    alignment and engagement, and a moderate positive
    impact on capabilities. This tactic likely maintains
    consistency with prerecession goals. Therefore,
    looking within the organization to collaboratively make
    improvements and reduce costs actually increases

    The survey of 2,100 U.S.
    companies turned up several surprises:

    1. Unexpectedly, the most damaging strategy
    not layoffs
    While layoffs are undoubtedly
    for those let go and those who remain, survey
    respondents said that they had only a moderately
    negative impact on engagement, alignment and
    employees’ sense of capabilities.


    cuts, pay freezes and reductions in benefits

    also had a moderate negative impact on employee
    engagement, which came as no surprise, but
    these cuts had no significant impact on alignment or

    3. Mandatory furloughs also had no impact on
    alignment and capabilities
    , but unlike other
    methods of reducing compensation, they had no affect
    on engagement. Perhaps that is because unlike the
    other actions, a furlough may be viewed as somewhat
    more equitable: You do not get paid, but neither are
    you required to work.

    4. The tactic that
    had the greatest negative impact on employees was
    reduced service to customers.
    customers are internal or external, putting employees
    in the position of providing poorer service lowers
    engagement. There is also an inherent alignment
    conflict when a company’s stated values emphasize
    service, but company actions undercut those values.

    In the News

    Shingo Award Recipients Announced.
    Organizations from the United States, Mexico, United
    Kingdom, and India will receive honors for their
    achievements at the 22nd Annual Shingo Prize
    Awards Ceremony on May 20. The Shingo Prize is
    recognized as the premier international award for
    operational excellence and serves as an
    organizational road map for vision and strategy
    alignment, employee empowerment, continuous
    improvement, innovation and development, quality,
    and sustainable results.

    Award recipients will
    receive their honors at the international Shingo Prize Conference to
    be held in Salt Lake City, May 17-21.

    Airline Performance Improves. For the
    consecutive year, the performance of the nation’s
    leading carriers improved, according to the 20th
    annual national Airline Quality Rating (AQR). It was the
    third best overall score in the 19 years researchers
    have tracked the performance of airlines.

    Released during a news conference at the
    National Press Club, the rankings show that of the 17
    carriers rated in 2008 and 2009, all but Alaska Airlines
    had improved AQR scores for 2009. The industry
    improved in three of the four major elements of the
    AQR: on-time performance, baggage handling, and
    customer complaints. Denied boarding is the only
    element where the performance declined.

    View the 2010 numerical ranking

    of the nation’s leading 18 airlines, according to
    the AQR.

    The FDA’s Position on GMP

    Where does the U.S. Food and Drug Administration
    (FDA) stand on good manufacturing practices (GMP),
    the set of regulations that govern manufacture and
    testing of medical devices and other medical products
    like pharmaceuticals, diagnostics, and food? And
    what of the universal device identification?

    Good manufacturing practices are, in general, a
    quality system that follows certain basic principles.
    These principles govern the manufacturing process,
    including the control and evaluation of process
    changes; the drafting of documentation, including
    instructions and procedures; the training of operators;
    the records of manufacture and distribution; and the
    handling of recall and complaint.

    According to
    information from the FDA, “The current good
    manufacturing practices requirements set forth in the
    quality system (QS) regulation require that domestic
    or foreign manufacturers have a quality system for the
    design and production of medical devices intended for
    commercial distribution in the United States.”

    However, the FDA information goes on to say that QS
    regulations are an “umbrella” covering any number of
    devices “from simple surgical hand tools to very
    complex computerized axial tomography scanners.”
    The FDA acknowledges that it’s not practical for
    regulations to specify details, but only to
    require “general objectives such as the use of trained
    employees, design reviews, design validation,
    calibrated equipment, process controls, etc.”

    Training Courses


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    The Five Pillars of a Lean Workplace

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    13485 Process Based Internal Auditor

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