Lean Organizational Structure Lean Leadership Series Topics • • • • • • • • • • • • Work Flow and Work Design What is a Value Stream? Organizational Structure Lean Organizational Structure Benefits of Lean Organizational Structure Incentives and Reward Structure Adapting Structure and Systems Education and Training Barriers to Change Achieving an Extended Lean Enterprise Sustaining Lean Organizational Structure Summary Organizational Structure Marketing Maintenance Product Design & Development Production Quality Mgmt Organizational Silos Procurement Finance/ Accounting These silo units impede efficient communication, coordination, responsiveness and overall system optimization Organizational Structure • Traditional Organizational Structure ▫ Is incompatible with the value stream flow ▫ Its design support long production runs of standardized parts in batches with long flow times ▫ It does not support one-piece flow and just-in-time (pull) production ▫ It is structures to minimize machine and worker idle time, but at the expense of very high inventory levels, long flow times, cluttered shop floors and high scrap/obsolescence rates ▫ It is not structured for minimizing response time and maximizing flexibility ▫ Results in extreme specialization of job functions Organizational Structure • Traditional Organizational Structure ▫ Results in a large number of job classifications ▫ It is incompatible with the team approach of Lean production in which workers perform many tasks and have few job classifications Lean Organizational Structure • Effective structure in Integrated Product/Process Teams organized as self-managed work teams ▫ A dedicated team for each product family includes expertise from marketing, engineering design, purchasing, tooling manufacturing, industrial engineering, quality assurance, customer relations, suppliers and customers • Work teams are focused horizontally on a linked set of activities along the value stream • Facilitate ongoing efforts to minimize waste via continuous improvement initiatives Lean Organizational Structure • The work teams are in a position to perform many of the “indirect tasks” associated with managing their work, including: ▫ ▫ ▫ ▫ ▫ ▫ Workspace layout Quality assurance Maintenance Setup change-overs Rebalancing work loads Continuous improvement Benefits of Lean Organizational Structure • Greatly reduces non-value-adding functions • Increases efficiency • Increases flexibility • Enhances the workers’ value to the Enterprise • Improved employee engagement and satisfaction • Harnesses its employees ideas towards continuous improvement and enables it to grow profitably. Education and Training • The most important element in any organizational transformation initiative is that of education and training • These are especially critical in transitioning an organization from a mass-production paradigm to a Lean-production paradigm Achieving an Extended Lean Enterprise • A lean transformation is not complete until it reaches beyond the immediate company to include customers and suppliers in the overall Lean system design • Only in this way can the complete value stream be structured and optimized in accordance with Lean principles and practices Summary • There is only one effective organizational structure for anyone else seeking to become Lean and that is one built around Value Streams. ▫ The value stream is the core structure of a Lean Organization • The objective is for organization is to become world class, create a seamless process of taking a product concept to customer deliver • Remove waste that occurs in all functional interfaces of the organization Summary • Identify the set of tasks to be optimized and synchronized • Performance metrics are only useful at the value stream level • Lean Organizational Structure is the only structure that can bring all of the best thinking and best efforts in the organization to bear on sustainable, bottom line improvements