1. June 2012 | Issue 2
OpEx Review
A TBM
Consulting Group
Publication
Enterprise-Wide Operating System
Connects Strategy to Execution,
Delivers Dramatic Returns
Carlisle competes in five major business segments, including interconnect technologies for aerospace
“ was tired of hearing
I Like most U.S. operating method for all of compete with China.”
about lower cost manufacturers, Carlisle our factories.”
Since TBM helped it roll
Companies Inc. had been
manufacturing in But consistently measuring out the Carlisle Operating
using various lean and
China. I was convinced productivity was just the System (COS) almost four
Six Sigma tools to make
start. There were, Roberts years ago, the company has
that if we did the right operational improvements
believed, significant started to realize many of those
things, we could com- for decades. But even though
opportunities to perform opportunities. Since 2009,
it was keeping up with
pete with China.” better, much better in fact. COS initiatives have generated
competitors and consistently
— David Roberts “Frankly, I was tired of more than $70 million in
outperforming the SP 500
Chairman, President and CEO hearing about lower-cost cost savings and reduced the
index, something was missing.
Carlisle Companies Inc. manufacturing in China. company’s manufacturing and
That something was clear I was convinced that if we warehousing footprint by
to CEO David Roberts did the right things in the
when he first started visiting organization, we could (continued on page 4)
the plants after joining the
company in 2007.
Also in this issue:
“When I walked into a
2| Technology: Improvement opportunities
factory, I would have no
abound in IT
idea how they measured
productivity,” he recalls. 5| Leadership: Carlisle CEO talks about
“Every plant measured it strategy deployment and growth
differently. It was obvious
6| Lean Progression: Insights into real-time
that we needed a consistent
triumphs and challenges
www.tbmcg.com

2. Leading Thoughts Technology Matters
Invisible Waste and Hidden
June 2012 | Issue 2
Opportunities in IT
Lean IT: A Process Is a Process
By Tonya Vinas
Here’s a familiar situation: People
are more focused on technology and
technical details than on business
processes, performance and end What would happen if a team of employees met to hold
results. When problems pop up, which a kaizen event and found that suddenly no one could
happens frequently, everyone goes into speak? Or that everyone could speak, but no one could
firefighting mode. There’s little root cause analysis or attempt hear? Or that everyone could speak and hear — but in
to identify underlying issues that would prevent recurrence. different languages?
Management priorities shift every six months.
Obviously, no problems would be solved during that kaizen.
I could keep going, but what I’m describing is a typical
corporate IT department. Fortunately, the same operational Lean process improvement can’t happen without open
excellence practices that can transform a production communication and immediate action. Increasingly, both
line or product development process can transform an IT require IT tools. Many in process improvement focus only
organization and dramatically improve the service it provides on the ills of organizational-wide IT systems, which often
to company employees and partners. are the cement of silo walls and the breeding grounds for
misapplied data. But we can’t ignore the fact that these
For example, single-minute exchange of dies (or SMED) days, all types of business communication and transactions
was one of the first tools that American companies adapted happen via real-time electronic connection, and these
from Japanese manufacturers. It boils down to completing all connections are as much a part of process infrastructure
setup work that can be done externally when equipment is as warehouses and machinery. Many problems/solutions
still running, and accelerating all setup activities that have to reside in IT systems, and as use of these systems expands,
be performed when the equipment is shut down. A machine so does their role in lean continuous improvement.
changeover team becomes more like a racing pit crew.
TBM has helped companies implement such quick changeover Consider what happened at Milbank Manufacturing Co.
techniques in a variety of industries, some far removed from the when the IT department created value stream maps for all
factory floor. In the IT realm, the techniques can be applied to of the IT systems used in various departments.
system updates and routine maintenance, reducing downtime
“The one for the sales department was beyond a spaghetti
and making it possible to perform such updates more frequently.
map,” said Brad Skinner, Vice President of Sales
Applying operational excellence practices to IT processes Marketing. “It was obvious that we weren’t set up to serve
thus improves uptime. But there’s more to it than that. When the customer.”
IT becomes more flexible, responsive and cost effective, users
gain access to new technology sooner, which means that they Skinner decided to make his department the focus of lean
can do their jobs more efficiently and serve your customers process improvement and so began a series of kaizen events.
better. That, in my experience, is always a good thing. During one of the events the team discovered a crucial
disconnect that was causing a tremendous amount of waste
Keep up the good work, and service issues. Milbank’s private-label partners used IT
systems that spoke a different language than Milbank’s; so
as soon as private label orders came in, they lost visibility.
Bill Remy No one could track them. Well, one person tracked them. It
Executive Vice President, was the only job that person did — full time.
International Operations
The solution was simple. An IT specialist wrote a patch of
coding to connect the two systems. Now, all of the private-
label orders have as much visibility and automation as
Send OpEx newsletter feedback
others, and the person who used to track them performs
and story ideas to opex@tbmcg.com.
work that creates much more value for customers.
2 | OpEx Review | June 2012 | www.tbmcg.com

3. Technology Matters, continued
“Private-label orders were stumbling,
and it was our fault,” Skinner said. CLOGGED SERVERS
“Now they are taking off.”
In addition to process disconnections,
EMAIL WASTE
IT systems house mountains of
waste: redundancies, excess inventory
(irrelevant and outdated data),
overflowing email inboxes, clogged
servers, etc. IT systems and process
leaders, then, need to be part of
DATA
process improvement not just because
they enable work, but also because EXCESS
IT processes are as broken as all other
processes. Convincing IT experts of
OVERLOAD INVENTORY
this can be difficult, but there’s plenty
of precedence in what has become
known as “office kaizen.” uses standard lean tools to root out You might think that a clear loading
waste in administrative work. dock means everyone is doing a
good job managing inventory and
Armstrong World Industries These include: that an improving OEE means
uses standard lean tools • alue stream mapping for
V assets are running efficiently, but
waste identification; what about your IT systems?
to root out waste in
• 3P/2P (product and process
Just because you can’t see those
administrative work. processes doesn’t mean they aren’t
creation to eliminate waste) and,
loaded with waste and problems
Robert Abel, Director of Global • MDI (visual management,
— or, if included in lean process
Process Improvement for Armstrong daily accountability, workplace improvement — efficiency and
World Industries, said his company observation, standard work and 5S). opportunity.
3P/2P in a Transactional Work Environment
LeanSigma® Global
3P – Product
Production
2P –
Production
Lean Tools for
Continuous
Summit 2012
Preparation Preparation Improvement This column is based on
Create the presentations made at TBM’s
Process that Transactional 2011 LeanSigma Global
Create Your Work
“Product” Optimizes Summit. Sign up for this year’s
Making the Environment
summit September 19–20 in
“Product”
Atlanta today to hear more
lean process improvement
Optimize to Vigilance in
Eliminate Waste Waste Elimination success stories.
www.LeanSigmaGlobalSummit.com
The principles of 3P/2P are the same in both manufacturing and transactional workplaces:
If we don’t design the product and the process to create the product correctly, we introduce
waste and cost into the product in our ongoing work. How a customer experiences an Tonya Vinas is a freelance writer and
order for a spare part, for example, is as much a product as the part itself. The customer editor specializing in business and
can experience poor quality in the form of waiting, excessive processes (too many steps),
leadership issues.
part mix-ups, shipment mishaps, etc.
Source: Robert Abel, Director of Global Process Improvement, Armstrong World Industries
OpEx Review | June 2012 | www.tbmcg.com | 3

4. From Strategy to Execution to Dramatic Results, continued from page 1
Working Capital as a Percent of Net Sales How each unit will achieve its objectives
is determined during the “strategic
32% deployment” process, which establishes
annual improvement priorities (AIPs)
30% and key performance indicators
(KPIs) at every level of the business.
28% Monthly management team reviews of
performance metrics, linked to their
26% objectives, maintain focus and prompt
fast corrective action when any area falls
24% behind. The approach forces leaders —
and the organization as a whole — to
22% focus on a small number of initiatives
that will make the biggest impact on
20% growth and profitability.
Q1 ‘09 Q2 ‘09 Q3 ‘09 Q4 ‘09 Q1 ‘10 Q2 ‘10 Q3 ‘10 Q4 ‘10 Q1 ‘11 Q2 ‘11 Q3 ‘11 Q4 ‘11
Systems and procedures to improve demand-forecasting capabilities, procedures
that reduce payment cycle times, and implementation of best payment practices,
Carlisle regularly assesses how
have improved Carlisle’s working capital and return on invested capital metrics. each site is doing in terms of
management behavior through a
process known as managing for
nearly two million square feet. Like most Begin With the End in Mind daily improvement (MDI).
U.S. companies, Carlisle saw revenues An overview of the Carlisle Operating
fall in 2009 during the recession. But System doesn’t start with the elements
unlike most others, the company’s net of the system itself. It starts with “In the beginning, each of our businesses
income increased that year, in part Carlisle’s strategic vision. As stated in the had six, seven or eight AIPs. Now each
because of its COS initiatives. For 2011, company’s annual report, Carlisle’s road business has three or four,” says Mike
Carlisle posted record sales of $3.2 map to 2014 has five key targets: global Voigt, Vice President of COS. “You have
billion, up 28 percent over 2010. sales of $5 billion, an operating margin to be able to resource them right. You’re
“Because of the productivity improvements increase to 15 percent, an increase in better off working on the business and
that we’ve implemented, we’ve even sales from outside the United States to executing three AIPs really well.”
brought work out of our China plants and 30 percent, a reduction in working Today, well over half of Carlisle’s
back into the United States. We’re cost capital to 15 percent of sales, and a total workforce has received COS training,
competitive with the Chinese, particularly return on invested capital of 15 percent. mostly in the context of kaizen events.
with the cost of wages in China going up,” Each business unit has its own roadmap To date the company has conducted
Roberts reports. with specific targets that, when achieved, 1,500 weeklong and point kaizen
will roll up to the corporate objectives. improvement events.
Such results are only the beginning. Those targets are fixed and don’t change
Rolling out COS across five major from year to year. (See QA with CEO Carlisle regularly assesses how each
business units — which all operate fairly David Roberts, on page 5.) site is doing in terms of management
independently — and 75 manufacturing
locations worldwide has been no small
feat. What ties everything together at
Carlisle, as this case study reviews, is Carlisle Companies Inc.
strong leadership engagement; a clear Headquartered in Charlotte, N.C., Carlisle Companies Inc.
alignment between improvement is a global manufacturer with five major operating businesses: construction materials,
priorities and five-year business goals; transportation products, brake and friction products, interconnect technologies (wire,
and a uniform, clearly communicated cable, connectors and related assemblies) and foodservice products. Founded in 1917,
operating system that continues to today the company has 75 facilities worldwide. Carlisle reported annual sales of $3.2
expand as Carlisle’s needs evolve. billion in 2011. In 2011, the company won TBM’s Perfect Engine Corporate Award.
4 | OpEx Review | June 2012 | www.tbmcg.com

5. From Strategy to Execution to Dramatic Results, continued
behavior through a process known as
managing for daily improvement (MDI).
The MDI program includes SQDC Executive QA
boards (for safety, quality, delivery
and cost) that display performance in Why Operational Excellence?
each work area and for the whole site An interview with David Roberts,
and sustainment of 5S. The metrics Chairman, President and Chief Executive
displayed on the boards align with the Officer, Carlisle Companies Inc.
overall business and corporate goals.
(www.carlisle.com)
During daily facility walkthroughs,
plant managers review performance in
How do you gauge the impact from
each department and work cell, noting
areas that require action. The system has the Carlisle Operating System?
instilled accountability and ownership If you look at our true hard savings over the
for daily decisions and forced cross- past three years, it’s been a little bit north
functional cooperation. of $20 million each year. And frankly, we
have $20 million in savings forecasted
“Now I can walk into any factory or for this year. It would have been difficult
distribution center and those boards are going for us during the downturn that
there,” Roberts says. “The measurements started in 2008 until now without having
are different. They might be measuring implemented lean. What we were able to save over that period was
a different cost metric in a tire plant the result of the COS efforts of all of our people. Our profitability in
from what they’re measuring in a 2009, in the midst of the downturn, was higher than in 2008 before
foodservice product plant. But at least the downturn started, on 23 percent less revenue.
I can understand what they’re trying to
measure, see that they’re measuring it How do you use strategy deployment to prioritize
every day, see that they’re going on their
improvement activities?
walks every day, and see if they have
corrective actions in place for any issues Every month we have a strategy deployment meeting with my staff.
that have come up.” It’s usually on the telephone. We go through the bowler charts
and KPIs and determine how we’re doing. We have five strategic
See the full case study at tbmcg.com elements: revenue growth, margin improvement, globalization, return
for more information about the on invested capital improvement, and working capital improvement.
Carlisle Operating System. That’s what we look at every month, if they’re red or green. If it’s
green, we don’t talk about it; if it’s red, we talk about what we need
to do to turn the objective to green.
What are the primary challenges and goals that you’re
working on this year?
We work toward the same five strategic goals every year. They
never change. They’re the same, and everybody’s compensation
program is tied to how we do against those five goals. Consistency
is important. You can’t keep changing the goals because if you do,
your employees would have no idea what our overall vision is for the
company. Our goals remain consistent, and we talk about them every
time we get together.
David Roberts will be a keynote speaker at the
LeanSigma® Global Summit in September 2012.
Visit: www.LeanSigmaGlobalSummit.com to view the agenda.
OpEx Review | June 2012 | www.tbmcg.com | 5

6. Management Update: Lean Progress Assessment
CI Program Satisfaction High in the Early Years and Over
the Long-Term; Many Firms Struggle Around Year Five
By Angela Scenna
Early analysis of benchmarking data from Lean Progress Observations
TBM’s Lean Progress Assessment reveals Based on participant responses to date, here are some of our
some fascinating insights about the progress initial observations:
companies make and the challenges they face.
• he Shiny Wears Off. In comparison to the average
T
In a 2011 IndustryWeek survey of business leaders, more score, respondents four to five years into their lean journey
than half of respondents indicated that their continuous rate their progress highest (see Figure 1). Companies
improvement (CI) initiatives are failing to meet operational in years six through nine struggle to sustain gains and
and market objectives. Such experience supports TBM’s view therefore score noticeably lower (see Figure 2). This suggests
that the mere initiation of a CI program, the creation of a CI that many companies’ CI efforts hit a plateau around
office and a stable of Lean SixSigma tools will not guarantee the five-year mark. Potential reasons for the plateau may
success. Instead, a wide range of forces and factors must be in be changes in leadership, changes in strategic direction,
place to assure that continuous improvement strategies are, in lack of sustainment or inability to extend improvements
fact, aligned with core business objectives and contributing throughout the enterprise.
meaningfully to revenue growth and profits.
• lder and Wiser. In contrast, companies 10 or more
O
To help our clients and similar organizations assess the extent
years into their continuous improvement programs rated
to which their CI efforts have progressed, earlier this year we
their progress significantly higher overall and twice as high
developed the Lean Progress Assessment. Companies taking
in the quality of their lean value chain, leadership and tools
the assessment answer a variety of questions that yield progress
used (see Figure 1). These organizations have internalized
scores for leadership, lean value chain, growth and tools used.
and institutionalized lean principles from the top down
Component scores and the total score place each participating
and enjoy segment-leading growth and profit performance.
organization into one of three discrete groupings — tool-driven,
system–driven and principle–driven — which allows them to
compare and contrast their efforts with those of their peers.
Figure 1 – Comparison to Overall Average Figure 2 – Short-Term Vs. Long-Term Performance
LVC Growth
Final Score Scoring Tools Score Leadership 30%
Score Score
Year 1 -46% -48% -51% -59% -28%
20%
Year 2 -9% -15% -18% -1% -10%
Year 3 -4% -18% -4% -1% 1% 10%
Year 4 16% 21% 19% 9% 19%
Year 5 8% 17% 8% 5% 6% 0%
Year 6–7 -16% -31% -24% -12% -7%
Year 8–9 -7% -21% 0% -7% -5% -10%
Year 10–14 12% 19% 13% 15% 2%
Year 15–21+ 22% 29% 28% 21% 14% -20%
Y1 vs. Y15+ -88% -107% -110% -102% -49% -30%
Y1 vs. Y10–14 -65% -82% -73% -85% -30%
Y1 vs. Y5 -59% -77% -65% -68% -37% -40%
Y2 vs. Y5 -19% -38% -28% -7% -17%
-50%
Year 1 Year 2 Year 3 Year 4 Year 5 Years Years Years Years
6–7 8–9 10–14 15–21+
Respondents in Years 4 and 5 of their lean journey rate them- Companies that are at least a decade into their CI programs
selves the highest when comparing their progress with the rate their progress significantly higher than those with
average overall score. shorter tenures.
6 | OpEx Review | June 2012 | www.tbmcg.com

7. Management Update: Lean Progress Assessment, continued
• tuck in the Middle. Interestingly, smaller companies
S
Key Take-aways
($100 million) and very large companies ($5 billion)
rate their progress higher than organizations with revenues 1) xecutive leadership engagement is the most
E
between $3.1 and $5 billion (see Figure 3). Companies critical determining factor in the success of
in this size range may have grown through acquisition, continuous improvement initiatives.
experiencing rapid expansion and growth, and they are
likely focused on how to become even bigger. Oftentimes, 2) Broad, senior management-led participation
these organizations are at a critical point where they in strategy deployment is needed in order to
need a comprehensive business system and a disciplined achieve breakthrough objectives.
management process for profitable growth. One can argue
that larger ($5 billion) organizations have learned their 3) ompanies need to step back and align CI
C
lean lessons well, sustaining gains, leveraging competitive improvement initiatives with their strategic
advantages and breaking through revenue plateaus. plans. Managers working “in” the business
must also be working “on” it.
• ertically Challenged. Non-manufacturing
V
companies rate themselves marginally higher than The potential for loss of momentum is high with so many
manufacturers (see Figure 4). And healthcare companies manufacturing companies nearing or entering the six- to
score substantially better than their peers in many other nine-year maturity range for their CI programs. Now is the
vertical markets. In leadership alone, healthcare time for these companies—possibly yours—to prevent that
companies rate themselves almost 29 percent higher. from happening by more tightly aligning your continuous
What’s interesting here is that CI is relatively new to efforts with your strategic plans and business results. In the
these types of organizations; they may not have hit the near future we will be asking our pool of participants to map
six-to-nine-year sustainability challenge so they are largely their CI progress to their actual business results. Look for this
positive about the benefits of their CI programs. data in an upcoming edition of OpEx.
Figure 3 – Small Companies Vs. Large Companies Figure 4 – Scores by Segment and Vertical Market
LVC Growth Tools Leadership
30% Final Score Scoring Score Score Score
20% Manufacturing 43.6 7.7 8.4 15.4 12.0
Non-Manufacturing 47.2 8.3 8.7 16.8 13.4
10%
Ag., Forestry, Fishing 37.0 4.5 6.5 15.5 10.5
0%
Construction 54.0 10.5 10.8 18.8 14.0
-10% Educational Services 66.0 10.0 8.0 25.0 23.0
Healthcare 51.6 8.6 9.4 17.6 16.0
-20%
Information 34.0 4.0 5.0 17.0 8.0
-30% Mgmt. of Companies 45.0 10.0 8.0 17.0 10.0
Mining 34.0 7.0 5.3 11.3 10.3
-40% Less than $101 to $500 to $1B $3.1B More than Other services 30.7 5.7 5.7 10.3 9.0
$100M $499M $999M to $3B to $5B $5B Public Administration 46.0 7.5 8.0 16.5 14.0
Real Estate 46.0 7.5 8.0 16.5 14.0
Final Score Tools Score Growth Score
Utilities 44.0 9.0 6.0 14.0 15.0
Leadership Score LVC Scoring Wholesale trade 56.0 9.0 11.5 19.5 16.0
Companies at each end of the size spectrum rate themselves Non-manufacturing companies rate themselves higher than
higher than those companies in the middle. manufacturers, perhaps because big efficiency gains early on
are common.
OpEx Review | June 2012 | www.tbmcg.com | 7

8. Updates and Events
Alignment: Three In-depth Articles Available
Below are summaries. Full versions available at www.tbmcg.com Resource Center.
THE LEAN PROGRESSION MODEL
Maximize the Returns from Your Operational
MANAGEMENT BRIEFING
The Lean Progression Model: Maximize the Returns From
Your Operational Improvement Efforts Over the Long Term
Improvement Efforts Over the Long Term
By Ken Koenemann
Most corporate-led, enterprise-wide business improvement initiatives
Executive Summary
By Ken Koenemann
will fail. Observers put the failure rate somewhere between 50 and 95
percent. Recalling past grand initiatives and subsequent failures, it’s no
wonder that employees are always skeptical of any new acronym-riddled
This management briefing improvement program promising to help them do their jobs better.
by TBM Consulting Group
describes how recognizing the
maturity of your organization’s Understanding where your company is
operational improvement
in the lean progression model—the tool-
efforts and culture—whether
you’re at the tool-driven,
driven, system-driven or principle-driven
system-driven or principle- stage—is the first step toward avoiding
Recognizing the maturity of your organization’s operational improvement efforts and culture—whether
driven stage—can ensure that the improvement plateau and keeping
your process improvement your organization moving forward.
efforts continue to deliver
significant results year after
year. The briefing describes For those companies that succeed though—for companies that make
the top priorities at each stage the commitment, change expectations and change how they work—the
returns can be impressive. For example, companies that have adopted
of the lean progression model
lean manufacturing and Six Sigma practices (which TBM combines as
you’re at the tool-driven, system-driven or principle-driven stage—can ensure that your process
that need to be targeted to LeanSigma) frequently report double-digit productivity increases year after
move forward. year. They achieve cost savings that add up to millions of dollars annually.
Their revenue growth exceeds the industry average by a healthy margin,
and net income increases even faster. (See boxes, “How Operational
To get from the tool-driven
Improvements Can Add Up,” and “Long-Term Performance of Principle-
to the system-driven stage, Driven Lean Businesses” on pages 7 and 8 for examples.) Many case
for example, requires: a studies over the past 20 years or so have documented such performance
leadership-driven method gains again and again in industry after industry.i
improvement efforts continue to deliver significant results year after year. The briefing describes the top
for prioritizing improvement
projects, process improvement Why then do so many business improvement programs flounder and fail
work beyond the factory— to achieve anything close to their full potential? This TBM management
briefing describes how understanding where your company’s business
such as engineering and new
units and facilities fall within the lean progression model— the tool-driven,
product development—and system-driven or principle-driven stage—can help maintain momentum
a more thorough effort to and ensure that you realize the maximum financial returns from your
develop employee skills and performance improvement efforts.
knowledge.
800.438.5535 | www.tbmcg.com
priorities at each stage of the lean progression model that need to be targeted to move forward.
CONTINUOUS IMPROVEMENT BUSINESS ALIGNMENT
MANAGEMENT BRIEFING
Continuous Improvement and Business Alignment:
Link Operational Improvements to Financial Results
Link Operational Improvements to Financial Results
By Ken Koenemann
By Ken Koenenmann
Make the connection between continuous improvement
Executive Summary initiatives and financial returns by understanding the
links to shareholder value and capturing the benefits of
Depending upon who you performance gains.
talk to, somewhere between
5 and 50 percent of business Operational improvement initiatives often lead to dramatic improvements in
improvement initiatives actually throughput, inventory levels, quality, productivity and overall efficiency. Such
efforts can make the workplace look better and make employees feel like
deliver the targeted benefits.
they’re working more efficiently. But despite double-digit gains in productivity
One of the characteristics of and other operational metrics, many companies have a difficult time realizing
companies that are successful the benefits from their work on their financial statements.
Depending upon whom you talk to, somewhere between 5 and 50 percent of business improvement
is a tight alignment between
improvement activities and Today, the top priorities of manufacturing executives are revenue growth,
business objectives, including improving cash flow and containing costs, according to a recent study
of business improvement activities by IndustryWeek magazine. If such
financial ones. This TBM
results aren’t achieved and documented, it will only be a matter of time
management briefing explores before an operational excellence program loses both momentum and
the connections between management support.
business improvement
initiatives actually deliver the targeted benefits. One of the characteristics of companies that are successful is a
projects and financial returns, This TBM Consulting Group management briefing explains how
and some of the steps that key performance indicators (KPIs) should align current and planned
improvement projects with business priorities and directly contribute
management must take to
financial benefits.
capture the financial gains.
Translating Lean and Six Sigma Gains Into Shareholder Value
At a fundamental level operational improvement programs build
shareholder value by increasing profit and reducing the assets required
tight alignment between improvement activities and business objectives, including financial ones. This TBM
to generate it. Shareholder value can be expressed as a simple equation
of profit over assets, or return on assets (ROA). Profits consist of revenues
minus costs; and assets consist of net working capital plus fixed assets
(see Fig. 1). This may be obvious to most business executives, but it’s
important for the management team to clearly define and review these
factors to make sure improvement activities are aligned with financial
performance goals.
Building deeper financial literacy within the organization is one of the
management briefing explores the connections between business improvement projects and financial returns,
primary priorities—often overlooked—that companies must address
when committing to a long-term business improvement program. Many
supervisors and department heads, and even business managers, tend
to focus on hitting and protecting their own budgets.
and some of the steps that management must take to capture the financial gains.
800.438.5535 | www.tbmcg.com
GET MORE OUT OF YOUR BUSINESS IMPROVEMENT INITIATIVES
MANAGEMENT BRIEFING
Align Projects With Strategic Objectives: Achieve Annual and
Longer-term Objectives by Maintaining Strong Connections
Align Projects with Strategic Objectives
By Anand Sharma, Bill Remy and Ken Koenemann
Between LeanSigma Improvement Projects and Business Strategies
Achieve annual and longer-term objectives by maintaining
Executive Summary strong connections between LeanSigma® improvement projects
and business strategies.
More and more companies are Leadership, at its heart, is largely about recognizing the need for
using policy deployment — a change, determining what kind of change is necessary, and pushing the
management tactic that’s also organization in that direction. Strategic planning processes determine the
known as strategy deployment, direction. But as grueling as such planning sessions can be, that’s the easy
hoshin kanri or hoshin part. Execution requires a day-to-day and week-to-week focus that is difficult
planning—to keep change for any organization to maintain, which only becomes more difficult as
business size and complexity increase.
By Anand Sharma, Bill Remy and Ken Koenemann
and process improvement
activities aligned with strategic
objectives. Achieving business Effective execution boils down to three primary
targets depends in large part management roles:
on how well policy deployment
itself is executed across multiple 1. Make sure the organization is working on projects and process
businesses, sites and teams. improvements that will have the greatest impact realizing the
As this management briefing strategic objectives.
describes, companies that 2. Ensure that changes are implemented and institutionalized, with
maintain a strong linkage minimal backsliding.
More and more companies are using policy deployment—a management tactic that’s also known as
between projects and
objectives are more likely to 3. Understand the leverage points and effectively convert process
make business changes that changes into financial results, for example, by closing facilities to
contribute to both cost savings reduce fixed costs, or using the newfound capacity to boost sales.
and revenue growth year This management briefing describes how to align business improvement
after year. The extent of that projects with strategic business objectives by using policy deployment,
contribution depends on how a strategy execution tactic also known as strategy deployment, hoshin
strategy deployment, hoshin kanri or hoshin planning—to keep change and process improvement
well projects are executed kanri or hoshin planning.
at all levels.
Projects are the best reflection
of management’s true intent
Cathleen Benko and F. Warren McFarlan argue in their book,
Connecting the Dots1, that most companies fail to capture the full
value of their projects, and do a poor job of connecting projects
activities aligned with strategic objectives. Achieving business targets depends in large part on how well
to the organization’s top priorities.
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policy deployment itself is executed across multiple businesses, sites and teams. As this management
briefing describes, companies that maintain a strong linkage between projects and objectives are more
likely to make business changes that contribute to both cost savings and revenue growth year after year.
The extent of that contribution depends on how well projects are executed at all levels.
Publisher: Anand Sharma: asharma@tbmcg.com
Executive Editor: Angela Scenna: ascenna@tbmcg.com
Contributors: David Drickhamer, Bill Remy, Angela Scenna, Tonya Vinas
Art Direction and Design: Crossbow Group, crossbowgroup.com
Printing: Carter Printing Graphics, Inc., carterprintingnc.com
OpEx Review is a publication of TBM, the TBM logo, and LeanSigma® are registered
TBM Consulting Group trademarks of TBM Consulting Group, Inc.
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8 | OpEx Review | June 2012 | www.tbmcg.com