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Flexibility driven customer service with S.M.E.D

posted Apr 28, 2020, 8:57 AM by Frederick Portal

The customer service challenge:

In an ideal world, customers would all regularly order the exact same product in high volumes. The real-life trend for most company's existing customers is to order increasing variety, more frequently, in lower volumes. As for their new customers; unfortunately they often don’t order the same variants as existing customers. This leads to proliferation of sales references with detailed forecasts becoming increasingly unreliable. Customers’ own customers behave analogously, so even in commodity markets many customers require ever shorter order to delivery times with smaller batches.

Two strategies:

The classic commodity strategy of “economies of scale” from long production runs with big batches to "buffer" unproductive changeover time and high stocks of finished goods to serve orders quickly is now unfit for purpose with this proliferation of variants and reduction of order sizes. It also shows diminishing returns on investment, even in today’s economic environment of near zero interest rates, as stock holding costs may still be around 15% of stocked commodity value per annum, totally wiping out profit.

To dominate the competition a better “lean” strategy is to gear production to fast changeover. Taiichi Ohno describes this as “small lot size and quick setup”  and implemented the idea at Toyota around 60 years ago with fast die changes on presses changing over from producing one part to the next part with a target of “single minutes”; less than 10, instead of previous changeover times of 2 or 3 hours. This led to the acronym S.M.E.D. for Single Minute Exchange of Dies. Ohno tells of production's resistance to change with this new strategy in production and had to change their “attitude”.

The power of SMED:

I first became aware of the power of SMED, 30 years ago, when a SMED workshop, which I led at the European production site of the leading global watch battery manufacturer, enabled the production cycle to be reduced from a monthly plan to a weekly plan for the production of about 100 different references. The increased reactivity to customer demand enabled a massive reduction in supply chain stock, reduced stock-holding costs including reduced obsolescence as batteries have strict sell by dates and enabled the cancellation of a European distribution warehouse investment all in all saving the equivalent of over 5 years profit from a single SMED workshop.

SMED facilitation by Business Excellence:

Business Excellence latest application of SMED was at a European producer of plastic master batches, an essential raw material in today's fight against the COVID19 pandemic. The task was daunting as the pilot production line is four stories high, making the co-ordination of team members’ actions out of line of sight during changeover a real challenge. To overcome the resistance to change experienced by Ohno we involved the team members who filmed and analysed the changeovers under our facilitation. The photo shows a helmet mounted camera used by a team member.

Team member films changeover


When the team members watched the video together, they collectively saw together the difficulties confronting each of them during the changeover and very rapidly a host of ideas were brainstormed to save time at every stage of the changeover. They showed maturity in seeking out the root causes of time being wasted and innovated effective solutions to eliminate or reduce time lost during changeover. The first round led to approximately a 30%-time saving. This is a typical result in well facilitated SMED workshops with every improved state becoming the new current state open to a further 30% improvement with a second workshop. The challenge with SMED is the ingenuity to find simple cheap ways to save time and not take the easy choice of expensive automation solutions. This is in line with Thomas Telford, the famous 18th century Scottish Engineer’s definition of an Engineer as someone who can do for sixpence, what any fool can do for a shilling (a shilling being 12 pence in those times)

The real "flexibility" gain from faster changeover is the ability to offer a quicker delivery than competitors with equal levels of infrastructure in machines and stockholding. Often short lead time deliveries enable premium pricing and fuel healthy profits. Additional production capacity from downtime reduction is also a benefit. Long live SMED.

© Frederick Portal - April 2020

# Taiichi Ohno : « Toyota Production System – Beyond large scale production » ©1978. 

Taiichi Ohno was the creator of Toyota's just-in-time production system, now known as "Lean Production"


Leaning out trade processing at the European Investment Bank

posted Jul 13, 2017, 3:11 AM by Frederick Portal   [ updated Jul 13, 2017, 3:12 AM ]

Eighteen months after speaking at the first E.I.B. Back Office Treasury "Forum" in 2015, I was delighted to be asked to present with Jean-Erik de Zagon from the E.I.B. the process and results of the EIB's lean initiative to the third Forum, attended by some of the same participants and other participants from BCEE, BBVA, BNP Paribas, Caceis, Clearstream, Deutsche Bank, EBRD, Euroclear, European Stability Mechanism, Grupo Santander, HSBC, Société Génerale CIB, Zürcher Kantonalbank, Le double Fond and many attendees from the EIB. 

We reminded the audience of the essence of lean being "Respect for People" and "Continuous Improvement" and the strategic operational choice between Resource Efficiency and Flow Efficiency. We covered the participative lean approach used to accelerate the processing of the large, diverse trades made by the E.I.B.'s portfolio Management Group, responsible for the investment of the bank's 10 billion Euros of long term assets. The diversity of trades and special "European Institution" circumstances preclude automation of the activity, so a lean approach was adopted to shorten lead times and so reduce the risk of incomplete massive trades. We set ambitious targets and engaged all concerned parties, working autonomously in six multi-disciplinary teams, on the improvement process, thus generating enthusiasm for the required changes and showing respect for those concerned. 

Quality: Strong trend in reduction of quality incidents processing Complex Trades (CT) and Simple Trades (ST)BBG Trade

The results  in terms of faster deal processing, quality issue resolution and team members' engagement were extremely positive with order of magnitude reductions in processing time and frequency of quality issues.
Jean-Erik covered the Key Success Factors behind the success of this pilot lean workshop for the E.I.B.

Project Management Forum at Mitsubishi Bank

posted Mar 14, 2016, 1:02 AM by Frederick Portal   [ updated Mar 14, 2016, 7:39 AM ]

Business Excellence recently presented an introduction to Project Management to the Directors and senior Managers of Mitsubishi UFJ Global Custody SA in Luxembourg. This could have been just an ordinary training session but it became a lively forum for discussing the challenges of Project Management in a multi cultural organisation. Effective efficient Project Management is key to delivering improvement in competitive business and is the delivery mechanism for making those improvements happen, itself key to keeping ahead of the competition. The forum made the point that any project management framework or tools used have to be robust to cultural differences to be effective. Business Excellence presented their own "Collaborative Project Management" approach developed over 10 years and which we believe is multi culturally robust, effective in building and delivering a great plan and efficient in wasting the minimal amount of employees' valuable time on project management and maximising time on delivery of tasks; thereby proving itself to be the most efficient project management framework. A great day with a fascinating discussion; thank you Mitsubishi Bank for the opportunity. 

European Investment Bank

posted Oct 5, 2015, 10:25 AM by Frederick Portal   [ updated Oct 5, 2015, 11:06 AM ]

"Optimising the Back Office" Forum: 

Business Excellence's Frederick Portal was honoured to be the keynote speaker and facilitator of workshop sessions during a two day event organised by E.I.B. and key partner Banks and financial services providers,  Banco Santander, B.C.E.E., BNP Paribas, The Bank of New York Mellon, C.A.C.E.I.S., Citi, Clearstream, Deutsche Bank, Euroclear, European Stability Mechanism, Goldman Sachs, H.S.B.C., Nomura, Société Génerale CIB and Zürcher Kantonalbank.
One entire day was spent training on "Lean" as a means to increase flow efficiency and a driver of business process improvement. A second day was spent in workshops on risk mitigation in transversal processes involving the E.I.B. and it's partners present at the Forum. "There are clear synergies and common practice and tools used in risk analysis and mitigation across critical industrial processes (pharmaceutical, aerospace or automotive) and financial services." commented Frederick Portal after training attendees and facilitating the application of Failure Modes and Effects Analysis (F.M.E.A. ).

Visual Project Management

posted Apr 10, 2015, 7:25 AM by Frederick Portal

Last week Business Excellence founder Frederick Portal was invited to view the "Nexans Way" of "Visual Project Management" during a 2 day workshop to roll VPM out in the early adopter Power Accessories" division. The workshop took place at Nexan's Donchery facility in the East of France and was attended by the President and teams of technical and commercial Managers from two sites involved in the projects piloting the VPM process, facilitated by John Papin, Nexan's Corporate Excellence Director. The "VPM" process makes the challenges of any project instantly visible as well as providing a solution to collaboratively improve the project plan to maximise the project's chance of success. I am sure that the adoption of VPM will be an asset for Nexans and wish them all the best with the process. Business Excellence has been using "VPM" or "Collaborative Project Management" at select Luxembourg clients to sucessfully manage complex and unique technical and commercial projects.
Nexans Way "VPM"

Untitled

posted Apr 10, 2015, 4:52 AM by Frederick Portal   [ updated Oct 5, 2015, 10:57 AM ]



World Bank - Doing Business in Luxembourg

posted Jan 3, 2014, 1:19 AM by Frederick Portal   [ updated Jan 3, 2014, 7:34 AM ]

In 2013 Luxembourg was ranked 56th amongst 185 nations by the world bank for ease of doing business this lay somewhere between Rwanda and Botswana on the average of ease of doing business for a small to medium enterprise. Luxembourg was ranked first globally for ease of enforcing contracts, but by the law of averages it fared worse elsewhere to achieve such a poor position for a country so ambitious to be business friendly. You may hypothesise that large businesses in Luxembourg enjoy easy contacts at ministerial level to iron out the difficulties but that small businesses have to struggle in an environment where public services are not organised around SMEs but apparently around themselves. SMEs may indeed  feel more harassed than supported by the tone of the official letters couched in gobbledygook that they receive from administrations.

The 2013 report stresses the need for SMART regulation to allow the "traffic" of business transactions to "flow". This is the essence of LEAN philosophy and lean transformation in industry, service and government. In Great Britain, government and service have been on the lean path for 20 years and the United Kingdom is ranked 7th for ease of doing business for SMES with2 other European countries Denmark and Norway at 5th and 6th, whereas central European countries like Germany, France, Belgium and Luxembourg lie ranked between 20th and 56th place. Is it not time for Luxembourg government to discover Business Excellence and where better to start than LEAN, a perfect practical approach to enable value to flow between a service provider (government administrations; known as "Civil Service" in the UK) and customers such as SMEs or taxpayers both private and corporate and the tax administrations or patients in a hospital or drivers at Sandweiler). A LEAN approach can be piloted for quick wins and once understood deployed by the administrations or service providers themselves with facilitation from Lean Service experts. This approach could bring Luxembourg to the top of the central European cohort in ease of doing business for SMEs. Will the new government be more open to LEAN or will "Simplification Administrative" continue just to automate with IT inefficient processes, forming the "traffic lights" that prevent value flowing in the Luxembourg economy? Time will tell, but Business Excellence Luxembourg is willing and available to advise service providers how to make it easier for both their customers and themselves.

How did Luxembourg progress between 2013 and 2014 for ease of doing business for SMEs; essentially "No Change" the Grand Duchy slipped back 2 places amongst 189 nations, mainly due to new risers like Malaysia. In the past Luxembourg's banking secrecy and industrial heritage  has provided many jobs in large enterprises. The future motor for Luxembourg employment may lie in SMEs applying banking and industrial core competencies to market opportunities; unless those enterprises are strangled by excessive complex regulations. The opportunity for LEAN in government has never been stronger than it is now. 

 






The full 2013 report is available freee from this link 

and for 2014 Luxembourg is now ranked 60th

and here is a good French summary from L'essentiel and a scan of the shorter print version:

Not so easy for SMEs in Luxembourg without LEAN and SMART administration

2013 Siggys Cup Team

posted May 6, 2012, 12:24 AM by Frederick Portal   [ updated Mar 12, 2013, 2:41 AM ]

Business Excellence is proud to compete again in the prestigious Luxembourg corporate event the 2013 Siggy's Cup.
To hone the team building skills an agile organisation needs training and we participated in the sixth Siggy Cup a sailing regatta organised by Ariane Rey of Challenge sàrl.

With a team of 6, mostly unknown to each other before joining the team, in a competitive environment over 4 days of racing yachts in variable weather conditions, you quickly hone the team building skills necessary to get a team of strangers working seamlessly together towards a single purpose. This is the essential requirement for an agile consultancy organisation, based on "dream teams" assembled from a network with the right competencies for the customers specific needs. 
Our Siggy's Cup team taught us the dos and don'ts of fast teambuilding to the extent that by the first race on the third day our boat was over the finishing line before the finishing line had had time to be set up! A great performance even if it didn't win us the race.

posted Oct 14, 2009, 11:16 PM by Frederick Portal   [ updated May 26, 2012, 12:11 AM ]

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