Strategic Perspective to Fleet

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Strategic Perspective to Fleets Total Cost of
Ownership
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Most Organizations Struggle to Stay Competitive

• While a few seem to find ways to become truly
  exceptional!

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The DIFFERENCE?

• Becoming Principle Focused
• Correct Principles!
• Traditional wisdom is frequently based on
• Incorrect or outdated principles
• Only one principle at a time

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Becoming PRINCIPLES Driven
OPERATIONALEXCELLENCECulture
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Example

• If its not broke, dont fix it.
• Traditional common sense, that doesnt make any
  sense at all

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Shigeo Shingo
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Shigeo Shingo
WHY
HOW

• KNOW-

IF ITS NOT BROKE, BREAK IT CHALLENGING THE
STATUS QUO PRINCIPLE FOCUSED
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Cost Management/Control

• How is it that so many organizations focused on
  lower costs, never achieve greatness (or real
  significant cost reduction, for that matter)?

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Cost Management/Control

• Narrow focus?
• Wrong focus?

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What is the Correct Principle?

• Accelerate the FLOW of VALUE
• And its converse Identify and Eliminate Waste

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Focus on Flow of Value

• What is value?
• What is waste?
• What is flow?
• Flowing Value Principle based Focus!
• Identify and Eliminate Waste
• Everyone can contribute every day

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7 Wastes

1. Over-Production
2. Inventory
3. Waiting
4. Defects
5. Motion
6. Transportation
7. Over-Processing

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Economies of Flow

• Reduced Lead Time
• Increased reliability and predictability of
  results
• Reduces Flow Time
• Matches supply to demand and sustains pricing
  levels
• Improves responsiveness to demand and product
  changes
• Reduces overall customer inventory
• Reduces customer time to market (or similar)

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Economies of Flow

• Cost
• Quality
• Reduced costs of poor quality inspection,
  rework, scrap, etc.
• Quality must improve as flow velocity increases
• Less inventory makes defects more obvious
• Productivity
• Decreases work time that is non-value added
• Reduced overhead functions like
• Purchasing
• Planning Control
• All accounting for these
• Reduced inventory control points and complexity
• Decreases needless movement of product

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Economies of Flow

• Cost (cont.)
• Lower capital investment
• Less space
• Smaller equipment less complexity
• Lower inventory costs
• Significantly improved operational equipment
  availability
• Increased Value
• Less Feedback Delay speeds improvement rate
• Closer positioning improves communication and
  feedback
• Complex systems improve rapidly
• Clear determination of value added and non-value
  added

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Necessary but NOT Sufficient

• The principle - Flowing Value - is absolutely
  necessary
• There are other principles that are also required
  to achieve greatness
• The other principles magnify the impact of
  Flowing Value

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WHAT ARE THE PRINCIPLES OF OPERATIONAL EXCELLENCE?
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(No Transcript)
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10 Principles

• Nurture humility and respect for the individual.
• All value is created through processes.
• Maintain constancy of purpose.
• Seek perfection.
• See complex systems holistically, dynamically,
  and as closed loops.
• Seek to understand value from the customers
  point of view.
• Value can only be created with demand.
• Accelerate the flow of value.
• Embrace Jidoka Separate people from machines
  and  Stop and Fix
• Ingrain scientific methods throughout the
  organization. (Everyone is a scientist)

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High Velocity Organizations

• Imbed all of the principles of operational
  excellence
• Recognize the interdependence of the of the
  principles
• Nurture a culture of total employee involvement
  in rapid continuous improvement
• Achieve incredible results consistently

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Principles Apply Everywhere
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ADDITIONAL TOPICS AS TIME PERMITS
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Mental Models

• Traditional Mental Models (Not based on
  Principles)
• Standard Costing
• Managers/Engineers make all improvements
• Keep moving even if we are going in the wrong
  direction
• Empowering workers is giving up control
• Cost control systems control costs

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• Application of the model like real
  transformation is not a sequential,
  well-cadenced progression throughout a company.

II. The Shingo Prize Model a. Levels of
Transformation
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T
S
LEADERS MANAGERS EMPLOYEES
PRINCIPLES
T
P
SYSTEMS
S
P
TOOLS
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THE PERFECT SYSTEM

• can not be designed into its work from the
  startno brain trust could ever figure out in
  advance all the little things that could go wrong.

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COMPLEXSYSTEMS