hi expert please read the case and help me answer Why does lean play such a central role in Vareille's strategic plan? thank you

topic: Lean Manufacturing at FCI (B): Deploying Lean at Nantong, China

This case was written by Cynthia Laumuno from CUBIK Partners, based on interviews with Yves Merel and Pierre Vareille of FCI, under the supervision of Enver Ycesan, Professor of Operations Management at INSEAD. It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Additional material about INSEAD case studies (e.g., videos, spreadsheets, links) can be accessed at Ray Akehurst, FCI Plant Director at Nantong (China), was carefully assessing the previous months scores on the plants KPIs when Kevin Zhao, the Lean Manager, entered his office. Every month, they took the time to review the actions taken during the period and the workshops implemented to fix defects or facilitate continuous improvement.

Think Global, Act Local

Akehurst remembered the call he had received a couple of years earlier from Yves Merel, the recently appointed VP of Industrial Development, announcing his surprise visit to Nantong. Merel explained that to prepare the seminar launching the lean manufacturing initiative in July 2008, he was in the process of auditing all the plants.

A couple of weeks later, Akehurst attended the two-day in Singapore. After presenting the lean philosophy within the FCI context together with CEO Pierre Vareille, Merel had presented the KPIs they would implement and monitor on a global scale along with ambitious targets: We have to cut by half the customer complaints, the missed deliveries, the flow time, and reduce by three quarters the number of accidents. To achieve this goal, we expect you to improve your own KPIs by 2% per month from your base line.

Merel continued: You are required to dedicate a team member to the lean initiative. You must nominate a lean manager who will implement lean locally in your plant. He or she must have an adequate background, ideally identified as a high potential with proven leadership skills along with the ability to challenge the existing paradigm.

Akehurst knew immediately who Nantongs lean manager would be: Kevin Zhao. Zhao had been acting as an Autonomous Production Unit (APU) manager for the past year. He had already discovered lean by doing research on continuous improvement tools and was very excited about this methodology. Zhao had been working for FCI for 13 years in different positions. He had first discovered lean in manufacturing magazines, but his knowledge remained theoretical. FCI was now giving him the opportunity to both understand and apply this methodology. His first step as lean manager consisted of a training programme, organized in three three-day sessions in India, the USA and China. This hands-on programme gave him an understanding of his new role as the interface between FCIs Nantong plant and the corporate headquarters, and equipped him with skills to deploy lean.

He wondered about the best way to deploy lean at Nantong. It was a recent but fast-growing plant. Nantong employees who had heard about the lean manufacturing initiative launched by corporate headquarters saw it as additional work, hence his first challenge was to get the buy- in from the staff and have them adopt lean tools to boost their performance.

Deploying Lean at Nantong

After a lean kick-off within the plant, the first step was to set up the corporate visual management standards along the production lines. Each production line had a visual management board depicting the corporate KPIs on safety, quality, productivity and service levels (see Exhibit 1). As lean was seen as additional work by the staff, visual management was a good way to explain its necessity and impact. Through visual management, people could see the waste on a tangible basis, not just based on anecdotes. It was also used to highlight the plant organization and the staff members who participated in the lean implementation through workshops, along with the results achieved (see Exhibits 2 and 3). Zhao realized that these standards needed to be cascaded throughout the organization. He set a training schedule for the key people in the plant to be his ambassadors, and to answer recurring questions such as: What is lean for? What is lean pursuing? What are the advantages of implementing lean in Nantong? Management routines were implemented for each visual management standard. It was crucial to set routines near the board with production line staff. Teams attending to these routines included not only shop floor operators and supervisors, but also engineers so that they could grasp the idiosyncrasies of the shop. In this way the staff would exchange ideas about lean every day. For example, daily flash meetings were used by management to enforce the lean structure deployment and performance achievement as they focused on KPIs. During the Lean School training, Zhao remembered Yves Merel insisting on lean managers networking among themselves and sharing best practices. He established regular contact with another Chinese lean manager, who reminded him that one of the key success factors from his perspective was management support. Zhao understood that Ray Akehurst had to be involved. Akehurst started spending 20 to 30% of his time on the floor, discussing with the APUs to ensure that they had the resources to achieve their goals. Along with Zhao, he explained to the team the new production paradigm: If you identify a defect, stop producing. Think about what you did and how to improve it. This stop-at-first-defect mindset was very difficult for people to adopt. As often observed in Chinese culture, there was no direct opposition, just minor frictions. These had to be eliminated by changing peoples habits. To do so, Zhao and Akehurst knew that the team needed to change: In the event of a defect, the reflex must be to stop producing and to think. Managers must go to the shop floor to check things physically and not simply rely on what they see on a computer screen.

Zhao suggested that they convince the team through examples, reinforcing learning by doing. To break the existing paradigm they communicated using visual management to show the benefits of such practices. They demonstrated to the team that lean was a management behaviour that when widely deployed would enable a sustainable improvement.

Zhao decided to reinforce the methodology training via workshop facilitation. He used this training to show the staff that lean was a scientific and systematic way to find root causes to the problems encountered, and that the involvement of every team member was crucial one of the corporate targets that had not been met.

The employees gradually started to adopt the lean approach and were increasingly willing to use them to improve their working practices. This change in mindset appeared as soon as Hoshin workshops became a common practice in the plant (see Exhibit 4), focusing on ergonomics. These improvements were seen as a great step forward for everyone (and a quick win for Zhao). In addition, they allowed productivity gains by eliminating obvious sources of waste. As more workshops were organized on the shop floor, the staff developed a deeper understanding of lean. Depending on the problem to be solved, they relied on the lean specialists, a dedicated corporate team whose members could be booked on demand.

At the end of the first year, Zhao knew that he still had to reach the corporate targets requiring that every plant staff be involved in a workshop per year, and that the plant should implement one workshop per week. While cultural change was underway, deploying long-lasting lean would require a little more time.

The last step in deploying lean at Nantong was to massively use the methodology and tools to reach the ambitious corporate KPI targets (2% improvement on a monthly basis). Zhao and Ray Akehurst actively monitored the KPIs and shared the results with the supervisors and managers.

Significant Improvement Using Lean

Thirty months after the launch of the lean manufacturing initiative, they had maintained the continuous improvement culture in the plant through Kaizen (continuous improvement) workshops. In addition to the staff on the floor, these focused on the training of engineers, quality leaders, and managers to raise awareness of lean. They were an opportunity not only to share lean goals, risks and difficulties, but also to reinforce daily routines on the shop floor.

To create a sense of urgency, Zhao invited them to follow him to the factory warehouse to show them the piles of inventory the real thing rather than abstract figures on their management reports which was unacceptable in a fast-moving industry where products quickly become obsolete. Such visits had an eye-opening impact, significantly shaping their actions and decisions.

Nantong had a lot of catching up to do. There had been one accident in 2008; the supply chain flow time was around 65 days; missed deliveries (MPM) hovered around 40,000; they had an EPEI (Every Part Every Interval) of one week (7-8 days); and the average monthly customer complaint level was 1.5/1.6.

By December 2010, the KPIs had already improved: 0 accident since 2008 A supply chain flow time of 26/27 days A service MPM of 5000 An EPEI of 2.5/2.6 days An average monthly customer complaint level of 0.6/0.7 Demand had been increasing in the past couple of years, necessitating a restructuring of processes and in the management system to remain a relevant player in this competitive industry. The market conditions provided extra impetus for lean. But lean was a race with no finish line. Zhao still had to figure out how to maintain the momentum and raise the factory performance to the next level.