Lecture done by Yves Merel at Harvard Business School on November 10th, 2011

1. Group 4 Week 1 Learning Points
November 10th, 2011
Lean (Toyota Production System),
a risk free way to execute a strategy
Yves Merel
FCI Automotive
VP Industrial Development
ymerel@gmp11.hbs.edu

2. The visible part of Learning Points
Group 4 Week 1 Lean
(Lean)
(Not Lean)

3. The systemWeek 1 Learning Points
Group 4 underneath
Cost
Customer
Satisfaction
Delivery Quality .
Just In Time
Jidoka
Waste elimination Immediate reaction
on process lead time to any process issue
Problem Solving Workshops Kaizen Improvement Suggestions
Shop Floor Visual Control Standardized Work Management Routines
Strategy Deployment Hoshin Kanri Progressive Targets

4. My Lean 4 Week 1 Learning Points
Group Background
• I discovered Lean while working for , 10 years in France and
in the USA (Valeo is doing Lean with Toyota support since 1992)
• Then during 3 years I led the Lean transformation of
(a British automotive components supplier)
• And 3 years ago I joined to lead the Lean program from
Singapore
• For 6 years I’m coached by Freddy Balle (retired CEO, implemented Lean at
Valeo, Sommer Allibert, Faurecia and author of The Gold Mine and The Lean Manager)
• Pierre Vareille (Wagon CEO, FCI CEO) uses Lean to execute his strategies

5. Group 4Group Learning Points
FCI Week 1
Is one of the largest connector manufacturers, owned by Bain Capital since 2005
Its 14,000 employees are achieving a turnover of 1.3 billion €
Electronic
Division
Automotive
Division
In your car In communications In hospitals
In your
In electric computer
vehicles In your TV
In trucks In your In your
Cell phone credit card
Microconnections
Division

6. Group 4 Week 1 Learning Points
24 Factories
Europe
Besancon, France
Mantes , France
Epernon , France
Nuremberg, Germany
Mattighofen, Austria
Tatabanya, Hungary
Turin, Italy
Asia
Bangalore, India
Cochin, India
Cochin, India
Americas Cochin, India
Huntingdon PA, USA Changi Singapore
Huntingdon PA, USA Jurong Singapore
Juarez, Mexico Senai, Malaysia
San Pedro Sula, Honduras Nantong, China
Sao Paulo, Brazil Nantong, China
Dongguan, China
Namyang, Korea
Ishioka, Japan

7. LeanGroup 4 Week 1 Learning Points
System examples
Customer
Satisfaction
Just In Time
Jidoka
Waste elimination Immediate reaction
on process lead time to any process issue
Kaizen
Standardized Work
Hoshin Kanri

8. Group 4 Week 1 Learning Points
The amazing Just In Time principle
Holding more inventory does not help to delivery on time

9. The amazing4Jidoka Learning Points
Group Week 1 principle
Rejecting more products does not improve the quality

10. LeanGroup 4 Week 1 Learning Points
System examples
Customer
Satisfaction
Just In Time
Jidoka
Problem Solving Workshops Kaizen Improvement Suggestions
Shop Floor Visual Control Standardized Work Management Routines
Hoshin Kanri

11. KaizenGroup 4 WeekatLearning Points
Workshop 1 Cochin
• With Anil Kannat (Global Business Service Director) we launched in June 2011 a Lean
system focused on labor efficiency improvement
• During 3 days with a team we analyzed, simulated ideas and implemented
many suggestions. We finally reduced the lead time from 43.5 to 23 hours
• G.Kumar (GBS Lean Manager) then continued by leading one workshop per week
• We expect to save by the end of the year 25% productivity on 130 people

12. Visual Control Routine Learning Points
Group 4 Week 1 at Ishioka
• With Takeuchi san (Ishioka Factory Director) in May 2009 we trained all his
managers to perform the Visual Control Routines
• We practiced these daily routines on the shop floor with each manager
• In one hour maximum they have to go around all production cells and check if
any delay may impact the customers deliveries
• Then encourage the operators to make improvement suggestions on it

13. LeanGroup 4 Week 1 Learning Points
System examples
Customer
Satisfaction
Just In Time
Jidoka
Kaizen
Standardized Work
Strategy Deployment Hoshin Kanri Progressive Targets

14. Hoshin Kanri at Wagon Points
Group 4 Week 1 Learning
Since we had labor intensive operations in high cost counties,
we chose in May 2005 to target: Direct Labor – 1 %/month
Direct Labor Headcount Saved
Over 3 years 915 saved out of 3081

15. Hoshin Kanri at Learning Points
Group 4 Week 1 FCI
Since we wanted to grow our sales, we chose in Sept.2008 to target:
12
Safety - 3 %/month 200
Quality - 2 %/month
11 180
10 160
Number of Accidents
Quality Complaints
9
140
8
120
7
6 100
5 80
4 60
3
40
2
20
1
0 0
Group target Group 6MRA Group actual Group target Group 6MRA Group actual
90
Inventory - 2 %/month 400 000
Delivery - 2 %/month
80 350 000
Plant Flow time in days
70 300 000
60
250 000
50
MPM
200 000
40
150 000
30
20 100 000
10 50 000
0 0 000
Group target Group 6MRA Group actual Group target Group 6MRA Group actual

16. A toolbox full ofWeek 1 Learning Points
Group 4 Lean solutions
• Kanban • Single Piece Flow
• Flow Rack • Flexible Manpower Line
• Leveling • Externalized Changeover
• Small Train • Minimum Technical Solution
• Milk Run • Andon Light
• Cross Dock • Kamishibai
• Zoning • Concept Paper
• Red Bin • Set Based
• Poka Yoke • Design Checklist
• First Defect Stop • Autonomous Team
But copying Lean solutions only provides local improvement, rarely sustainable

17. Our way to lead the1changes
Group 4 Week Learning Points
• A set of Strategic KPI tracking the continuous improvement speed
(at all levels of the hierarchy from the entire group to every single operating team)
• A Lean Manager assigned in each site, leading workshops and
implementing visual control (trained on Lean tools and leadership techniques)
• A small team of Lean Experts leading workshops, training people
and auditing processes (Quality, Supply Chain , HR, Manufacturing Engineering)
• A quarterly Lean Review for managers to meet their peers, visit a
factory, share good practices and learn about Lean management
• A structured Communication (feedback emails, news letter, seminars, awards)
• A yearly CEO Visit at each factory to review, challenge and
recognize the continuous improvement

18. Lean ProsWeek 1 Learning Points
Group 4 and Cons
Advantages:
• It is less risky than massive breakthrough
• It is free of investment
• It is applicable on any type of process
• It is a structured way to execute a strategy
Requirements:
• It needs a mid term strategy
• It needs a boss leading it 15% of his time
• It needs an expert implementing the system
• It needs one manager per site implementing the solutions

19. Group 4 Week 1 Learning Points
Financial Impact
2008 2009 2010 Evolution
Missed Delivery 6MRA % 35 25 20 -43%
Quality Complaints 6MRA 149 104 59 -60%
Sales M€ 1 096 935 1 298 18%
Active Suppliers Number 1 083 1 018 888 -18%
Material / Sales 38% 37% 40% 6%
Safety Accidents 6MRA 8.3 2.3 1.7 -80%
Labor / Sales 31% 32% 27% -12%
EBITDA / Sales 13% 12% 14% 8%
Inventory Flow Time 6MRA Days 60 48 36 -40%
Cost of Investments Capex / Sales 6% 5% 3% -49%