Valmont’s Lean Journey

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Valmonts Lean Journey

• Stephen LeGrand
• VP of Operations
• Valmont Irrigations

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Agenda

• Valmont history
• Platform for change
• VOS
• Good to Great
• Lean Journey
• Transformation
• Culture
• Roadmap
• Lean Leader
• Motivational fun

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Valmont History

• 1946, started in farming
• World War II vet Marine, Robert B. Daugherty
• 5000 in pocket
• Valley, Nebraska, named Valley Manufacturing
• Building farm elevators for Sears, 1000 elevators
• name of the company changed to Valmont
  Industries, Inc.

• Growth search led down the road to Columbus,
  Nebraska, where a visionary was struggling to
  breathe life into a revolutionary idea the
  center pivot.
• Frank Zybach, part-time farmer and tinkerer,
  prototype center pivot in 1947

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Background

• 1954, agreed to license his patent to Bob
  Daugherty.
• The energy crisis of the mid-1970s brought
  concern about the cost of operating high-pressure
  mechanized irrigation equipment
• This has driven more efficient irrigation models
  with Valley being the worldwide product and
  market leader.

• Valmont operates from over 50 facilities located
  in 14 countries around the world.
• Headquartered in Omaha, Nebraska
• employs over 6000 highly trained personnel
  worldwide, 2,000 located in Nebraska.
• Today over 180,000 Pivots are operating around
  the world
• 6 manufacturing facilities
• Public company VMI

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Sounds like a good business

• Why change? Whats the burning platform?

• Economy is in a deep global recession, impacting
  all sectors. Magnitude and duration uncertain.
• In this business environment the company that
  creates the most value with the least resources
  will succeed, in spite of economic conditions.
• The past is littered with companies that were
  once on the top of their respective industry, yet
  dont exist today.
• To remain the leader 5, 10 or more years from
  now, we will have to exceed customer
  expectations.

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What needs to change?

• Purpose, People, Process
• Vision
• The right assets
• Doing the right things, in the right way at the
  right time.

Creating a new OPERATING SYSTEM The Valmont
Way
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What is an Operating System?

• A set of Operating Principles
• An operating system is a system that is tightly
  linked to all aspects of an organization.
• The Valmont Operating System contains standard
  improvement tools that are used throughout the
  company.

Operating System refers to the assets and
resources configured to maximize flow and value
to the customer and stakeholders.
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Valmont Operating System

• Goal of the Valmont Operating System
• Maximize Stakeholder Value through the leverage
  of standard and repeatable best practices and
  processes
• Key Principles of VOS
• Customer/Consumer Driven Process Design ?
  Optimize Process Effectiveness
• Continuously Reduce Non-value Added Activity ?
  Optimize Process Efficiency
• Employee Ownership ? Address the Impact of
  Change for the Employees

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Valmonts Operating System

• Key elements?
• Define how we will conduct business
• Good company to being a great company.
• Putting our values to work
• Using our peoples creativity
• Using lean tools to create Centers of Excellence
  
• Standardize on processes used around the world
• Culture of waste elimination from everything we
  do
• Extreme focus on our customer

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Kotters Eight Stage Change Model
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World Class companies strive for Breakthrough
improvement

• Shoot for doubling inventory turns
• Drastic reduction in lead time
• Year-over-year quality improvement
• Industry leading Operating Profit (OP)
• Double digit Return on Invested Capital (ROIC)

to achieve sustainable, superior financial
performance
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Until now we have

• Performed well and should be proud of our
  accomplishments.
• Been focused on getting results, not necessarily
  leaving a great process in place.
• In other words, we have not focused on installing
  standardized ways of doing our work across the
  business.

been a Good company
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Valmont will become Great, defined by

• An exceptional customer experience
• Having the right people and structure
• Level 5 leaders (Good to Great)
• Embodiment of Core Values
• sense of urgency
• A laser-like focus on what is important
• A culture of creativity and disciplined thoughts
  and actions
• Predictable, transferrable processes
• Sustainable superior financial performance

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Beginning the Journey

• CEO Strategy Senior executives
• Structure Lean Champions
• Lean tools training
• Six Sigma tools training
• Value Streams (current and future states)
• Define your roadmap
• Volume, Quality, Cost, Delivery
• Stabilize
• Quality, Scheduling, Machines
• Culture team and support

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Valmont Operating SystemAligns with Strategic
Financial Objectives
Corporate Mission
Corporate Initiatives
Business Objectives
Annual Performance Goals
Organization Goals
Product/ Process Line Goals and Objectives
Dashboard Measures and Gap Analysis
Team Goals
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Our Path to Lean
2011
2010
2009
Value Stream Mapping
EPEx
Pull
OPT
KanBan
LoadLeveling
Smaller Lots
ZeroDefects
EquipmentReliability
Set-upReduction
Kaizen
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You have the ability to minimize this
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Reactions to TransitionWhere are you? Your team?
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Lean Works
FLOW Lean Processes to minimize waste,
inventory, and lead times Organization Cultural
Change Lead from the top to encourage and foster
the environment to make and accept
change Quality Problem Solving systematic,
logical approach to problem solving
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The Business Toolbox
The Business Toolbox
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The Valmont Way Cultural Change Process
The Valmont Way!
Degree of Support for Change
Year 1
Year 2
Valmont Today
Time
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Lean Enterprise Transformation Road Map

• Lean is more than a set of tools, its a way of
  thinking acting to achieve sustained profitable
  growth

Live it
1 to 2 years
Decide to transform
6 to 12 months
Perpetual

• Activities/Behaviors
• Understand benefits of Lean, develop the business
  case
• Go and see World Class operations
• Seek guidance for the Lean Transformation

• Activities/Behaviors
• Build core team of Lean Practitioners
• Form Steering Committee
• Provide Lean training for everyone
• Create pilot line

• Activities/Behaviors
• Propagate Lean
• Engage all employees in PDCA
• Use Lean to execute strategy

• Activities/Behaviors
• DNA shift
• Culture of discipline, collaboration and
  constructive discontent

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Shingo Assessment
COE Criteria 1. Cultural Enablers (175
Points) 1.1 Leadership Ethics (50 Points) 1.2
Cultural Enablers - People Development (125
Points) 1.2.1 People Development - Education,
Training Coaching (50 Points) 1.2.2 People
Development - Empowerment Involvement (50
Points) 1.2.3 People Development - Environmental
and Safety Systems (25 Points) 2. Continuous
Process Improvement (400 Points) 2.1 Continuous
Process Improvement - Lean Principles (0
Points) 2.2 Continuous Process Improvement -
Value Streams Support Processes 2.2.1 Customer
Relations (50 Points) 2.2.2 Product/Service
Development (25 Points) 2.2.3 Operations (175
Points) 2.2.4 Supply (50 Points) 2.2.5 Management
(100 Points) 3. Consistent Lean Enterprise
Culture (150 Points) 3.1 Consistent Lean
Enterprise Culture Enterprise Thinking in a
Global Environment (75 Points) 3.2 Consistent
Lean Enterprise Culture - Policy Deployment (75
Points) 4. Business Results (275 Points) 4.1
People Development (25Points) 4.2 Quality (50
Points) 4.3 Delivery (50 Points) 4.4 Cost (50
Points) 4.5 Financial Impact (50 Points) 4.6
Competitive Impact (50Points)
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Tube to Trailer - Change

• Productivity to Throughput
• Functional to Value Stream
• Standard cost accounting to Lean accounting
• Tribal knowledge to documented processes
• Reactionary maintenance to Preventive maintenance
• MTS to MTO
• Structured organization to matrix

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Production Inventory Control

• Creating Flow
• Taking control fixed schedule with limited drop
  ins
• Kanban processes PULL vs. PUSH
• Inventory improvement IQR, ABC schedule/buy
• MTS to MTO
• Capacity vs Inventory
• SOP process improvements align globally
• Shorten Supply Chain

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What is the score of your game? ANADON is required
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TQM alignment with Lean

• One of the first sets is getting quality
  materials
• TQM 5 Pillars
• (Design, Commitment, Organization, Process,
  Leadership)
• Culture of Quality Mindset
• Proactive Quality Prevention
• PPAP, Supplier Development, First Pass Yields,
  Roll through-put yields, PPM/PPB, ISO, MRB
• ISO documenting of new value stream processes
• Customers Up front involvement in designs
• Track Total Cost of Quality put a on waste

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DEPARTMENT SCORECARD
DEPARTMENT INFO.
DAILY GOALS AND PERFORMANCE
DOWNTIME TRACKING IMPROVEMENT PLAN
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The Successful Change Agent/Leader

• Personal Ownership
• Make the change your own
• Manage through the paradox
• Communicate with honesty and integrity
• Recognize quality listening as a powerful tool
• What you can do as Leaders!
• Be aware of your PARADIGMmake the shift!
• Be aware of HOW change impacts your team!
• Understand the change FACTORS!
• OWN the Change at the Team and Individual Level!
• KNOW what successful change looks like and model
  it!

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Potential Challenges to Change

• Not tied to overall strategy
• Short-term quick fix or a passing fad
• Failure to deal with related emotions
• Failure to gain commitment of key stakeholders
• Lack of Clear expectations, measures and
  accountabilities
• Lack of Reinforcement of commitment and small
  successes
• Doesnt fit your paradigm

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Transition Leadership You Make A Difference
What you THINK
True Leadership (Positive Example)
How you ACT
What you DO
What you SAY
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Lean Leadership Style vs
Do it my way Do it your way Follow
meand lets figure this out together
Dictator Style Empowerment Style Lean Style
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Three Practical Keys to Lean Leadership

• Go See Go to the Gemba
• Management must spend time on the front lines.
• Ask Why
• Use the Why? technique daily.
• Show Respect
• Respect your people.

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As a Lean Leader

• Get each person to take initiative to solve
  problems and improve his or her job. Sense of
  urgency
• Ensure that each persons job is aligned to
  provide value for the customer and prosperity for
  the company. Engagement!

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In summary, a Lean Leader leads

• By setting the vision
• By building systems and processes that cascade
  responsibility
• By influence
• By example
• By being knowledgeable
• By getting into the messy details
• By coaching and teaching (ask questions)
• By engagement

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The DeMotivational Series When you dont care
any more
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This is our Marathon/Journey

• Thanks for inviting me
• Questions?