An Introduction to OPS Rules Transformation

1. Introduction to OPS Rules Transformation
Expertise
December 2012
© OPS Rules Partners, LLC 2012

2. We work closely with MIT Professor Simchi-Levi and use his
latest IP to identify Supply Chain Opportunities for Clients
In Operations Rules, Professor David Simchi-
Levi identifies the crucial element in a
company's success: the link between the
value it provides its customers and its
operations strategies. And he offers a set of
scientifically and empirically-based rules
that management can follow to achieve a
quantum leap in operations performance.
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© OPS Rules Partners, LLC 2012

3. Why Operations Strategy is so Important
We live in the Internet Age when it is difficult to create and maintain a
competitive advantage
 IP and innovations are difficult to keep proprietary
 Companies need to innovate and transform continuously
Many companies have used 6-sigma techniques as an operations strategy
 They “leaned out” their supply chains making them fragile rather than resilient
 Regional supply chain strategies have also underperformed
Transformations that matter only occur when business model innovations
enable more efficient use of physical assets, working capital and people
OPS Rules provides radical performance improvements that shift the
balance of power in industries
 We help your teams analyze your business environment and develop the strategic
insights you need to innovate your business model
 We help you use superior strategy to super-charge your continuous improvement
efforts
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© OPS Rules Partners, LLC 2012

4. OPS Rules helps Companies make Significant Business
Improvements by Optimizing their Operations Strategies
Potential Supply Chain
Complexity Supply Chain Flexibility End-to-End
Operating Strategy Risk
Management Segmentation Management Optimization
Improvements Management
Identifies hidden Quantifies risk Optimizes Supply Chain
Why it is costs of Long-Tail
Aligns supply chain design
exposure across
Optimizes the level of
costs and inventory levels
Important Products
with Customer Preferences
the Supply Chain
Supply Chain Flexibility
and location
Quantify the
Define supply chain degree of supply Understand the costs of
Use Supply Chain Network
Classification of segments based on chain risk at each supply chain flexibility and
Modeling Software to
What is Involved product portfolio to price/service preferences major node in the determine optimal level of
simulate and optimize
reveal hidden costs and design well-aligned, supply chain in flexibility across global
supply chain performance
supply chain segments terms of profit or supply chain
revenue exposure
1. Re-evaluate customer 1. Map the Supply 1. Investigate existing
1. Create all-inclusive
trade-offs with respect to Chain strategy with respect to 1. Benchmark current
cost model to capture
price/costs and service 2. Quantify flexibility supply chain performance
& report actual costs
flexibility financial risks 2. Evaluate relative 2. Identify opportunities for
of Long-tail products
2. Redesign supply chains to across the Supply effectiveness and efficiency improved performance
2. Investigate root
share scale advantages and Chain of current strategy tradeoffs
causes
How best achieved 3. Develop tactical allow supply chain 3. Develop quantitatively 3. Simulate current
differentiation where helpful strategies and 3. Update flexibility operations
and strategic
3. Optimize differentiated remedies to reduce strategy in light of current 4. Simulate potential
recommendations to
supply chain segments overall supply risk business and GTM improvements
reduce Long-tail costs
4. Engage sales and R&D to 4. Implement strategies and demand 5. Iterate until optimal
in the short and long
ensure functional strategies improvements and variability solution is apparent
term
align monitor results 4. Phase-in improvements
Representative Reduce freight and manufacturing costs by 30%;
Business Impacts Increase Revenue, Profits and Market Share significantly
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© OPS Rules Partners, LLC 2012

5. OPS Rules Created a Repeatable Process to help Companies
Benefit from Professor Simchi-Levi’s Intellectual Property
Efficiency Supply chain performance trade-offs are
different in each situation
High  Operating problems and their root causes
Cost Current understood/resolved
Strategy  Customer preferences analyzed
A  Unique customer segments identified
 Micro-optimization strategies considered
B
 Clear operations strategy defined
 Competitive differentiation strategy and
plan of actions agreed
C
Low
Cost
Responsiveness
Short Long
Response Response
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© OPS Rules Partners, LLC 2012

6. After current Execution Problems are Addressed, we Focus
on Creating a Strategic Operations Competitive Advantage
OPS Rules Operations Strategy Platform
Development-related Development Fulfillment-related
Vectors of Differentiation Supply Chain Vectors of Differentiation
 Product/Platform Architecture Plan/De  Push/Pull Optimized Planning
 Design for Supply Chain sign  Complexity Reduction
 Customer Value Proposition  Flexibility
 Make/Buy Strategy  Supply Chain Segmentation
 Strategic Partnerships  Macro/Micro/Supply
 Strategic Sourcing & Supplier OPO Chain/Production Optimization
Development Source  Supply Chain Risk Management
 Supplier Contracting  Managing Long Tail Products
 Operations Performance Management
Fulfillment
Supply Supply Produce Distribute Sell
Chain
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© OPS Rules Partners, LLC 2012

7. We use Data to Ensure Root Causes and Alternative Cures are
Fully Understood before Implementation Begins
Analyze Innovate Transform
----- ----- -----
Understand opportunities Reduce complexity & risk Pilot, prove, inspire
& root causes of problems and optimize strategy & lead the change effort
Data Collection Scenario Planning Transformation Planning
 Comprehensive Scope  Micro Supply Chain  Create a Vision
 Performance Benchmarks Optimization  Evaluate Challenges & Risks
 Customer-centered Approach  Potential Vectors of  Agree Transformation Roadmap
Differentiation
Evaluation  Scenario Analysis Planned Adoption
 Quantitative & Qualitative  Focus on new Behaviors
Benchmarking Scenario Analysis  Lead & Inspire the Team
 Key Customer Interviews  Current State Simulation  Over-communicate the Way
 Customer Value Proposition  Scenario Evaluation Forward
Improvements  Optimal Scenario Identified
Implementation
Conclusions Scenario Validation  Create/Deploy new
 Definitive Root Cause Analysis  Quick Wins Piloting Capabilities
 Preliminary Strategic  Customer/Supplier Test Drives  Monitor Progress to Close Gaps
Alternatives  Final Solution Specification  Use Simulation to Prioritize
 Requirements for Simulation & and Evaluate Continuous
new Metrics Improvement Projects
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8. OPS Rules Transformation Expertise
© OPS Rules Partners, LLC 2012

9. OPS Team Brings a High-Value Blend of Operations and
Consulting for at a Lower than Market Rate/Hour
 Team selection of senior experienced people is key at the project start
 Able to handle broad range of uncertainties
 Positioned to manage a significant increase in resources as project unfolds
 We recommend a junior consultant on the project for certain types of work
 Our transformation capabilities will enable success in both limited-scale
performance and in a broader-scale rollout
 We led a supply performance assurance effort at a global manufacturer –
Siemens
 Our unique IP and insights from David Simchi-Levi can be leveraged
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© OPS Rules Partners, LLC 2012

10. OPS Ensures that Every Aspect of Organizational Change is
Addressed in Order to Achieve Transformation Success
Stakeholder Engagement Create a sense of urgency
Stakeholder Reality Check Pull together the guiding team
Transformation Readiness Evaluation Develop the change vision and strategy
Culture Analysis Communicate for understanding and
Begin Cultural Change buy in
Transformation Process Buy-in Empower others to act
First pass transformation Produce short-term wins
workload analysis Organizational Don’t let up
Initial Transformation Create a new culture
Strategy
Change
Management
Sustainability
Collaborative Strategic Planning and Management
Time-based goals and objectives
Complete set of metrics
Transparency across functions and between levels
Continuous Improvement/Adaptation
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© OPS Rules Partners, LLC 2012

11. We Integrate Carefully with the People,
Culture and Realities while Driving Results
 There is no one-size-fits all. Plans are structured around current
realities and culture.
 Don’t waste peoples’ time. This is a busy environment with ongoing
initiatives and priorities.
 Our techniques get early engagement. People will test whether this is a
“program du jour”.
 Our prioritization techniques are sensitive to over-driving the resources
 We do whatever is needed to make the people and program successful
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© OPS Rules Partners, LLC 2012

12. OPS Rules Capabilities, Techniques and Tools
will ensure a Successful Transformation
 Personnel and Resources  Vision the End State Performance we
 Consultants with C-level experience who are Entitled to have
have led operations and transformations  Strategic planning – appropriate
 Lean and Six Sigma experience  Vision of Entitlement-achievement planning
 On-demand training of OPS methods for  Enterprise maturity models/to-be
client personnel workflows and metrics vision
 Project Preparation & Planning  Governance: Organization and Project
 Transformation readiness assessment  Cross functional team process
 Transformation workshop series to  Concept of operations document
scope, charter, plan, measure progress
 Client operating procedures
 Project roadmaps and detailed plans
 Pilot program design and execution
 Driving Performance
 End-to-end metrics design & definitions
 Stakeholder Engagement and  Metrics gap analytics & target setting
Communications  Barrier identification and ranking
 Outbound planning and execution tools  Barrier removal/escalation techniques
 Engagement outreach with 2-way discussion  Drumbeat gap closure process
 Key stakeholder analysis and mentoring  Correlation of operations / financial metrics
 Early adopter recruitment
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© OPS Rules Partners, LLC 2012

13. Enterprise Transformation Workshops (ETW) Generate
High Levels of Leadership and Employee Engagement
Scoping Project Planning Planning/Progress Completion
Preparation
Session ETW #1 ETW’s #2-X ETW
 Learn ETW process  Define tight scope of  Diagnose potential  Diagnose progress  Summarize Results
 Practice specific tools work for team implementation barriers  Develop risk mitigation compared to plan
planned for ETW #1  Learn Enterprise  Complete Team Charter strategies  Capture lessons related
 Learn specific ETW Transformation model  Define team roles and scope  Identify stakeholders to transformation
roles and language  Clarify “burning platform”  Develop detailed  Install continuous
 Meet ETW lead  Introduce sponsor to  Define specific vision and stakeholder management improvement methods
facilitator and set ETW process success metrics plan  Create process for
mutual expectations  Clarify roles for ETWs  Detail project milestones  Create communications measuring future
 Detail implementation plan messages and detailed progress
 Develop plan to ensure communication plans  Create action plans for
leadership commitment  Work toward team based future transformation
milestones work
 Leaders and project team members fully align on the project
requirements, plans, risks, milestones and progress
 Project team uses ETW output to fine tune project plans and assure alignment
across all stakeholders
 We develop an aggregate project progress reporting structure
 We help plan and then facilitate these events
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© OPS Rules Partners, LLC 2012

14. Our Approach is Optimized to Engage Key Stakeholders Early
and Help them Shape and Own the Transformation Vision
 What happens after implementation?
 Is this transformation really here for keeps?
 How will the change
Stakeholder Perspective affect my job?
 How do we continue improving?
 How can this transformation help us grow the business?
 What will I be trained on?
 How ready are we?
 How ready is the
business?
Degree of Support for Change
 What do changes look like? Commitment
 What is my role?
 How committed is the
leadership? Acceptance
 How will this affect me?
 How will this affect the
business?
 What is the transition  Align reward system to new
scope, full impact and environment
rationale for the  Empower stakeholder groups to
Understanding  Begin to generate buy-in fully own business processes
transformation?
 Highlight the need for and  Implement training focused on long-
benefits of transformation term use and continuous
 Develop action plan to remove improvement
barriers that impede pace of
transformation
 Define transition vision
 Provide sufficient training and
Awareness and business benefits
support
 Develop shared vision
for change
 Accept and respond to
input from stakeholders
 Define scope of transformation
 Identify sponsors and key Action Steps
stakeholders
 Plan project work steps and
milestones
Time
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© OPS Rules Partners, LLC 2012

15. Our Transformation Readiness Assessment Tool Identifies
the High-priority Issues to Address in Implementation
 Gathers readiness
insights from Tool Excerpt Illustration
personnel at many Do you have what’s needed to
levels and locations execute program?
What are the transformation issues you will encounter?
Case for Organizati
Transformation Leadership Organizational Capable
Transformat onal
Management Alignment Alignment Organization
ion Systems
 Gives us a baseline 1. There is a 5. The scope of Business 9. Organization 13. Key 17. Organization
of stakeholder
solid project is System: leadership geographic, has sufficient
business narrow and Assets, strongly functional, and data &
case to fairly simple to processes, supports the labor operational
perceptions justify the
project
manage skills and
technology
objectives of the
Transformation
stakeholder
groups are
expertise to
support the
initiative which committed to transformation
generate the
added transformation
 Informs early value and
provide
communications
value
and messaging
 Project team
addresses each issue
in the project plan
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© OPS Rules Partners, LLC 2012

16. Strategic Stakeholder Analysis Identifies Issues
Important to Key Players and how to Address them
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© OPS Rules Partners, LLC 2012

17. Knowing the Stakeholder Audience, We Develop
Messages, Themes and the Transformation Story
Communication Themes
Build Understanding / Gain Commitment /
Build Awareness Reinforce New Behavior
Objective Internalization Engagement
{Theme #1} {Theme #2} {Theme #1} {Theme #2} {Theme #1} {Theme #2} {Theme #1} {Theme #2}
Audience
Message
Vehicle
Goal
Available vehicles
Description: Developing key messages, themes and the transformation story are interactive processes for gaining key
stakeholder buy-in and delivering and demonstrating targeted communications
Instructions:
1. Identify the key messages for the initiative and the themes to reinforce actions (walk the talk)
2. Determine how to frame each message to accomplish the different communication objectives
3. Develop the transformation story with key stakeholders
4. Review and revise messages, themes and story with leads and key stakeholders to ensure consistency of communication
throughout the organization
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© OPS Rules Partners, LLC 2012

18. Up-front Analysis Allows us to Establish a Well-
coordinated Communication Action Plan
Stakeholder/ Assess
Objectives Channels Milestones Status Audience Effectiveness Roles
Communication Purpose Media Timing Date Completed Audience Response/ Follow-Up Lead
Newsletter Raise Email July 18th TBD Exec. Stakeholders Online survey Project
Awareness, and Project Manager
State Direction Leaders
E-Newsletter
Blogs
Website
Lunch & Learn
Screen saver
Description: Coordinating all elements into the Communication Action Plan, including team-level communications,
drives overall execution for internal and external audiences and stakeholders
Instructions:
1. Develop the Communication Action Plan for each project phase
2. Design the plan based on purpose and audience(s)
3. Use plan to monitor status of individual communications
4. Update plan throughout project
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© OPS Rules Partners, LLC 2012

19. We Design Program Governance to Optimize Collaboration
SWE Governance
and Inhibit Sub-optimization (US Navy example)
* EXCOMM SWE Board of Directors (BOD)
*VADM Etnyre, CNSF
* RADM Curtis, DCNSF/CNSL RDML Connor, N821 (FMB)
* MGEN Benes, OPNAV N85 RADM Lyden, OPNAV N41 RDML Shatynski, CNSF N00R
* RADM Guillory, OPNAV N86 RADM Reilly, MSC RDML Benedict, PEO IWS
* RDML Frick, V-NAVSEA RADM Hugel, SEA 04 Jeff Klein, SPAWAR 04
* RDML Campbell, OPNAV N43B RDML Orzalli, RMC Commander Ms. Leggieri, NAVICP
* RDML McManamon, SEA 21 RDML Horn, OPNAV N86F
* RDML Hebner, PERS 4 RDML Goddard, PEO SHIPS
Other Stakeholders (Participation as Required)
NAVSEA SPAWAR NETC CNP NETWARCOM C2F/C3F CNIC PEOs INSURV N86B N85B
RDML Frick, V-AVSEA
Chief Operating Officer
Communications Team
AO: CDR Campbell, CNSF PAO
RADM Guillory, OPNAV N86 Chief RADM Curtis, DCNSF
Financial Officer Chief Readiness Officer
Sustainment &
NAVRIIPCFT Personnel Readiness Team- Strategic Financial Management Team
Modernization Team FLAG Leads: RDML Hebner / FLAG Leads: RDML Horn
RADM Starling
FLAG Leads: RDML McManamon / RDML Shatynski AO: CNSF N41 CAPT Davis
Ms. Leggieri AO: CNSF N1 CDR Deehr Co-AO: CNSF N8 CAPT Kaufmann
AO: CNSF N43 CAPT Lewis Co-AO: PERS41 CAPT Sharpe CLASSRONs
Co-AO:NAVICP85 CAPT Stafford
Readiness, Requirements Planning
Logistics Strategic Financial Planning
(Parts / Food / Fuel / Ordnance) Over-arching Metrics Team
Personnel Assignment
AO: Mr. Warner, CNSF N8A
Maintenance Individual Training Financial Reporting /
Metrics
Unit / Intermediate /
Modernization Sustainment Training As of 14Sep07
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© OPS Rules Partners, LLC 2012

20. Maturity Models Measure Transformation Progress
at the Enterprise Level and Organization Level
Enterprise Maturity Model
 Create a common vision of Level 1 2 3 4 5
what it takes to operate as Enterprise Management
an enterprise Change Management Organization
Governance
 Give an honest , evidence- Alignment
based view of current Management Process
maturity level Problem / Barrier Resolution
Strategy & Planning
Execution & Results
 Enable deliberate Process Driven
planning for a desired Metrics - Drivers and Results
Cost Management
degree of advancement
Improvement Process
Tools & Methodology
Results Evidenced
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© OPS Rules Partners, LLC 2012

21. Our Cross-Functional Team (CFT) Handbook Clarifies
the Methods Necessary for a Project Team to Succeed
 Aligns stakeholders with a The CFT Handbook
common view of the work and The CFT and Business Improvement Team (BIT)
The 16 Step CFT Process and Map
1
3
approach to improvement Part I: Processes and Players 5
Step 1 Identify the high leverage processes and functions 6
Step 2 Establish the CFT scope and charter 9
Step 3 Select CFT leader and members 11
 Accelerates performance Part II: Scope and Mapping 13
Step 4 Validate scope and charter 14
improvement with frequent Step 5 Map the baseline process 15
drumbeat and rapid barrier Step 6 Establish baseline performance
Step 7 Identify value-added and non-value-added steps
16
17
removal Step 8 Map the entitled process 18
Part III: Measurements 21
Step 9 Determine key measurements 22
Step 10 Design the measurement system22
 Measurements are geared to Step 11 Establish initial entitled performance 22
Part IV: Barriers 31
advance global interests, not just Step 12 Identify barriers 32
local Step 13 Develop analysis to find root cause barriers
Step 14 Rank-order root cause barriers
34
36
Step 15 Assign and schedule barrier removal actions 38
Step 16 Track progress through measurement system 39
Glossary 63
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© OPS Rules Partners, LLC 2012

22. Our Barrier Identification and Removal Techniques
Accelerate Gap Closure and Performance Improvement
 Barriers (subject matter, business process, Culture
Barriers
cultural) are complex and interrelated 2
1
 Teams must remove barriers to improve
Work-
performance. Culture barriers are toughest Business
Process 3 Arounds
but provide the highest return Barriers 2
2
Subject
 Work-arounds grow due to barriers and can 1
Matter
add permanent cost. They must be dismantled
when barriers are removed.
Barrier to Subject Matter Business Process Culture
Desired
Performance
Barrier Cultural Barriers:
Removal 1X 10 X 100 X hardest but greatest
Impact returns
© OPS Rules Partners, LLC 2012

23. We create Specific Examples of Barriers and ask Project
Team Members to help Identify and Overcome them
Categories and Examples of Transformation Barriers and Symptoms
Business Process Culture
Appropriate lot, work package or batch size Inadequate focus on reducing process cycle times
Bottlenecks Views business as independent functions
Lack of flexibility Lack of enterprise vision, strategy and planning
Poor scheduling Inappropriate use of metrics, controls and incentives
Allowing process inputs to exceed speed of line Lack of expertise in reducing process cycle times
Allowing work-in-progress to grow Lack of attention to resource capacity utilization
Poor resource allocation Lack of balanced sense of urgency
Inappropriate process hold actions Cultural blindness-don't understand other functions
Poor process design Resistance to changing paradigms
Poor process implementation Inadequate emphasis on data integrity
Long cycle-times Multiple collections of same information or data
Low levels of first pass yields Lack of leadership/management forcing functions
Low productivity Hidden drivers of suboptimizing behaviors
Inadequate feedback Lack of root cause problem solving behavior/skills
Wrong measurements Behaviors that demonstrate policies are optional
Rework Behaviors that demonstrate practices are optional
Knowledge or skill deficits Inadequate strategic planning to drive performance
Inadequate or ineffective inspection Lack of error-proofing
Ineffective communication Excessive non-business "chatter"
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© OPS Rules Partners, LLC 2012