For this LeanROI interview we spoke with Jerry Wright, Senior Vice President of Lean and Enterprise Excellence at DJO Global, an international medical device manufacturer with annual revenues of $1 billion. DJO has operations in 20 countries and sells products in more than 80 countries.
Jerry works out of the company’s headquarters in Vista, Calif. He joined DJO in 1997 and has held leadership positions in quality, engineering and operations. He has been one of the key change leaders that introduced lean thinking to transform DJO Global from a traditional batch-and-queue manufacturer to a world-class, lean enterprise.
In addition to his observations below, Jerry offers the attached Microsoft Excel lean assessment tool for evaluating progress at the site level.
LEAN ACQUISITIONS
We’ve been doing lean acquisitions for over 10 years and they tend to go the same way. We make rapid improvements, which starts to shift the acquired company’s culture to that …. Continue reading Jerry Wright – Achieving ROI from Lean Acquisitions
Jerry Bussell recently retired as Vice President of Operational Excellence for Medtronic Surgical Technologies. He is currently President of Bussell Lean Associates, a lean advisory service for CEOs and their executive teams. Jerry is also Executive Adviser to Underwriters Laboratories’ Center of Continuous Improvement and Innovation.
First, leaders have to look at the overall mission of what the company is trying to do by starting with policy deployment. Lean is an enabling strategy that allows a company to execute all of its other strategies. What are you trying to do in the areas of business growth, customer service, new product introduction, financial performance, and development of people? You need to look at the strategic initiatives for every one of those categories, to look at the gap and determine where you want to get to in the current year and three years out.
Lean helps close the gap by improving …. Continue reading Jerry Bussell – Lean ROI Comes Down to How It Helps You Grow Revenue Faster
We recently spoke with Ken McGuire about the lean ROI topic. Ken leads an independent consulting firm and is a long-time authority on leading manufacturing practices. A founding member of the Association for Manufacturing Excellence (AME), most recently he designed and manages the AME Institute’s leadership development initiative.
ROI is a really confusing term. It’s not transparent what it means. Financial returns are not always obvious in operational activities. But shorter lead times are obvious. Better quality is obvious. But is that a financial return? There are clear financial returns only when the improved velocity is leveraged to benefit the whole business.
Investment is the other question with ROI. Is that the cost you pay for something? Or is it the cost of time when you could have been doing something else? How do you know which is which?
To simplify things, the manufacturing cycle begins with the buying decision and ends with delivery and cash collection. …. Continue reading Ken McGuire – Lean Returns Really Take Off When Velocity Improves
Part 2 of 2. Previous: A Three-Step Process for Capturing the Financial Benefits of Lean
Make no mistake about it. The lean journey is all about generating shareholder value. It starts by focusing on the customer and responding to and serving customers well in order to grow. But in the end it comes down to generating maximum value. Lean enables superior value creation by both increasing profit and reducing the assets required 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 chart below). This may be obvious to most business managers, but it’s important for the management team to think about these factors when marrying their lean journey to financial performance. The actions, process improvements and investments that they decide to pursue …. Continue reading Translating Lean Gains into Superior Shareholder Value
Part 1 of 2. Next: Translating Lean Gains into Superior Shareholder Value
We hear the question all of the time. “We see the immediate benefits from our lean projects and events. We understand the power of the process. Why don’t we see it on the P&L statement?” The CFO, who frequently isn’t participating directly, might even put it more bluntly, “On that kaizen event you say you improved productivity in that work cell by 50%. But next week’s payroll will be the same as this week. Where’s the return?”
At the tactical level, whether it’s a kaizen event, a lean project, or an A3, translating such ground-level activity into financial gains follows a three-step process in which the ultimate responsibility for capturing the benefits depends on management action. The first step is making the process improvements by applying the lean tools and methodology to eliminate waste, improve productivity, reduce inventory, and improve flow. …. Continue reading A Three-Step Process for Capturing the Financial Benefits of Lean
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