Nari Kannan

1
Welcome to Delphi Groups BPIS2006 Business
Process Innovation Summit
Welcome

• Nari Kannan
• CEO and Co-Founder
• Ajira Technologies, Inc.
• SessionTitle
• Quality, Speed, Cost Why Choose Two If you can
  Choose All Three?
• Manufacturing Lessons from Toyota applied to
  Business Process Innovation

2
Traditional Thinking Vs. Toyota Production
System (TPS)
Traditional Thinking Quality, Speed and Cost
Pick any Two!
Quality
Speed
Cost
Toyota Production System Goal All Three!
3
Agenda

• Toyotas Achievements
• Key Components of the Toyota Production System
  (TPS)
• Key Lessons for Business Process Innovation
• Key Requirements for Business Process Innovation
• Sample Application Lean Help Desk!

4
Toyotas Achievements

• Toyotas Key Goals Quality, Speed AND Cost
• Toyota has an Impressive Track Record in Setting
  Goals and Meeting them
• Toyotas Current Goals and Challenges
• 9.8 Million Vehicles by 2008 surpassing GM to
  become Number One Automaker (9.2 Million in 2005)
  in the World
• CCC21 Program Construction of Cost
  Competitiveness for the 21st Century
• Reduce Costs by 30 from year 2000 in three years
  while increasing quality
• Increasing Steel Prices, Labor Costs and
  Competition from other Japanese and Asian
  Automakers
• Challenges - Recent Recalls

5
Toyotas Achievements Speed of Production
Source Baseline Magazine Case Study September
2006
6
Toyotas Achievements Profitability
Source Baseline Magazine Case Study September
2006
7
Toyotas Achievements Quality

• Lexus and Toyota win 11 out of 19 J.D.Powers
  Initial Quality Awards in 2006
• Consumer Reports Consistently Rates Toyota Cars
  Best ones in
• Reliability
• Used Car Values
• Recent Recalls a Blemish
• 1997 2000 Lowest Number of Recall Notices per
  manufactured Car Toyota Lexus (Source
  mycarstats.com)
• Toyota Chairman Calls it a Crisis of Quality
• Toyota has a Track Record of Fixing Problems
  Permanently

8
Toyota U.S and World-wide Market Share
Source Baseline Magazine Case Study September
2006
9
Toyota Production System Key Components

• Roots American Quality Gurus
• Edward Deming, Dr.Joseph Juran, Armand Feigenbaum
• Just in Time Production (Speed!)
• Legacy was the Lack of Space for Warehouses in
  Japan adapted for the U.S
• Low Warehousing Costs, Low Spoilage, Waste, Scrap
• Even Suppliers activities coordinated with
  Toyota Production (One-Flow)
• Jidoka Fixing Root Causes, if any problem is
  encountered
• Fixes Problems by addressing Root Causes Ask
  Why? Five Times
• Eliminates need for inspection
• Increases Speed and Quality
• Minimal Scrap and Defective Parts reduce Cost

10
Toyota Production System Key Components

• Poka- Yoke Methods Mistake Proofing Quality
  and Speed Improved!

A worker at a Suzuki plant in Rome, GA, uses a
torque wrench to tighten a bolt on an
all-terrain vehicle. The green light (on wrench)
is a poke-yoke example. When lit, it shows proper
torque has been achieved.
Poka-yoke need not be complicated. Simple labels,
such as those on the circuit panel above, help
eliminate mistakes.
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Toyota Production System Key Components

• Kaizen Continuous Process Improvement
• Eliminate Muda or Waste of different kinds
• Overproduction Just in Time Production
• Inventory Takes up space, cost and spillage
• Waste of Motion Eliminate Movements
• Waste of Transport Eliminate Movement of
  physical things
• Overly Complex Processing Methods Is it a
  Value-adding process step?
• Defects Waste of Money and scrap needs time to
  get rid of
• Waste of Waiting Doing something while waiting

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Toyota Production System Key Components

• Variation Reduction
• Variation Costs Money, Customer Satisfaction
• Reduce Variation by addressing Root Causes
• Andons (Visual Controls)
• Make Problems Explicit Do not hide problems
• Fix Root Causes once made explicit
• Genchi Gembutsu Visiting the Workplace
• Means Go and See For Yourself
• Prolonged Observation of the work being done
  sparks ideas about improvement
• Best people to come up with improvements are the
  people who do the work!

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Why is Business Process Innovation Important?

• Across many verticals, Operating Expenses account
  for 40 to 80 of Revenues!
• Large portion of Operating Expenses are Internal
  Business Processes
• Sales, Financial and Administrative, Logistics,
  Customer Service Support
• Quality, Speed and Cost have the potential of
  Doubling Corporate Profits in many Organizations!

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Key Lessons for Business Process Innovation

• Keep Things Flowing in Services One-Flow or
  Just-in-Time
• Creating elaborate processes are never to the
  benefit of end-customers!
• Finish the process in as short a time as possible
• Increase Quality, Speed and Cost
• Use Value-added Analysis
• Shorten Value Adding Steps
• Eliminate Non-Value Adding Steps
• Shorten Mandatory Steps

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Key Lessons for Business Process Innovation

• Fix Root Causes, Not Symptoms
• Initial outputs may be low, but you win over the
  long term!
• Mistake-Proof Processes
• Design Better Forms, shorter ones!
• Incorporate Extensive Data Validation if
  automated
• California DMV Address Change Forms, Transfer of
  Ownership Forms Sep 2006!

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Key Lessons for Business Process Innovation

• Continuous Process Improvement
• Overproduction Keep Things Flowing and Fast
• Inventory Eliminate Waiting In between Steps
• Waste of Motion Scanning and Digitization
• Waste of Transport Scanning, Digitization and
  automated Workflow
• Overly Complex Processing Methods Is it a Value
  Adding or a Non-Value Adding process step?
• Defects Errors cost money, time and result in
  customer dissatisfaction. How can we make a
  process Error-Proof?
• Waste of Waiting Multi-skilling helps people do
  other things while waiting, breaks monotony and
  makes people experts at many things!

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Key Lessons for Business Process Innovation

• Wall Boards and Online Progress Monitors
• Make Current Statistics Explicit and Publicized
• Need Incentives for bringing up problems rather
  than punishment Key Requirement!
• Observe closely how work is done for a prolonged
  period of time
• Observe Bottlenecks
• Ideas for improvement will present themselves

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Key Requirements for Business Process Innovation

• Absolute Buy-in and Active Participation From the
  Top
• Lip-Service May Make Situation Worse than Before
• Patience, Long Term Outlook and Commitment to
  Continuous Process Improvement
• Multiple Efforts by GM and Ford in the past but
  not ingrained in the DNA
• Culture Change, Adaptation and Fine Tuning
  Necessary
• Best People to Implement Change are the people
  who do the work, Not the Managers, Not the
  Supervisors, Not the CEO!

19
Sample Application Help Desk

• Typical Complaints Heard about Help Desks
• I had to talk to three people before someone
  solved my problem. I had to repeat the same
  problem three times!
• All Three People had me repeat the same
  diagnostic steps all over again!
• Sometimes I got service fast, sometimes not so
  fast!
• My problem was pretty simple If only that
  information was on-line, I would not have called!

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Typical Help Desk Value Added Analysis
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Redesigned Help Desk
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Key Requirements for Redesigned Help Desk

• Active Promotion of Self-Service Options
• Job Rotation and Multi-Skilling
• Empowered Help Desk Agents
• Team-Based Help Desk Resolution of Calls
• Restructured Incentives and Awards

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Conclusions

• Manufacturing, especially Toyota Production
  System (TPS) achieves Quality, and Speed while
  reducing Cost
• TPS has a number of lessons for Business Process
  Innovation
• Quality, Speed and Cost in Business processes a
  crying Need Can Double Profitability!
• TPS can be adapted and applied to Services,
  leading the world in Services, what Toyota has
  done in Manufacturing!

24
Thank Y
ou

• Nari Kannan
• CEO and Co-Founder
• Ajira Technologies, Inc.
• Contact Information
• 925 487 1768 (Mobile)
• nkannan_at_ajira.com