Lean Product and Process Development

Lean Summit India

Jose FerroBangalore, November 2014

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Most organizations start their lean transformation efforts in manufacturing

YES, LOTS TO DO!!!

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Normally we have results like:

• Substantial increases of productivity (+30%) and quality (++1.000%)

• Capacity gains (+50%)• Lead time reduction (+50%) increasing

market response capability (smaller batches)• Reduces needs for space (+50%)• Less inventory (+50%)• Etc.....

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But we have a problem!

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Is this enough ?

“Improving the efficiency in the trolley car production will not

create the automobile”

Joseph Schumpeter (1883 - 1950 )

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To fully capture the benefits of the lean transformation, we need to rethink the way we develop new products

(and the processes that enable them)

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New products bring improvements in:

• Sales• Cost• Profitability• Growth• Market share and reach• Competiveness and business sustainabiliy

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A little tale: EMBRAER

• In the 90s it launched a new product using their traditional product development process

• The product was a huge success– An enormous investment– Smaller, cost effective, low in consumption for the need of point to

point travel, apropriate for smaller cities– Right product at the right time!!!– Huge demand- 5 x more than anticipated

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But there was a problem...• They couldn´t produce it– Many delays– Costumers unhappy– Share holders very nervous

Company at bay ....

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Then, they encountered lean manufacturing and begin changing the company

BY IMPROVING MANUFACTURING!!

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“Lean allowed our company to survive”

Frederico CuradoCEO

Lean Summit Brasil 2010

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Not yet to be capable to fully compete with Boeing and Airbus

But capable to mantain and solidify its position as nº 3 in the very competitive global

aerospace business

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And now Embraer is moving from

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TraditionalProduct

Development

Lean Product

Development

Why Embraer wants to change its PD system?

• They realized that the current system seems to be always:– Above the predicted budget– Always late– Lots of stress– Loosely conected with manufacturing and suppliers– Damages the economic performance

LIKE MANY OTHER COMPANIES13

A great Product Development System

• Will produce great products – not by luck– not depending on geniuses

• And will drive dramatic cost reduction – most of the costs (50-80%) of the operating costs

are defined in the design phase

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Lean Product and Process Development (LPPD)

• Creates great product sistematically and reduces costs at the same time

• While developing people knowledge and capabilities

• Integrating horizontally the company• Aligning the whole company (value adding

and support functions)around costumer value and needs

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Main elements: Lean Product and Process Development (LPPD)

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Elimating PD wastes

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Hand off (disconnection)

Waiting

Scatter Wishful thinking

Wrong tools

Knowledge

Useless information

Communication barriers

Understand costumer needs and expectations

– Gemba focus (or market research?)• Source of information and inspiration

– Set based/multiple alternatives– Strong internal debate– Alignment inside the organization– One person with a systemic view (Chief Engineer)– Conection with Hoshin Kanri to define goals and

targets

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Create flow, pull and cadence

• Strong Chief engineer manages and coordinates– Based on milestones and pulling events

• Set based engineering• Synchonization: decisions at the right time• Do we have a takt time?• Obeya room and visual management• Work load leveling to avoid mura and muri

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Leadership and structure: strong Chief engineer

– Deep systems design knowledge– Respect– Broad reponsability with strategic orientation but small

authority over functions– Overviewing and aligning strong functions (matrix

organization)

suppliers > body > engines > transmissions > interior >

– Undertstand and translate costumer needs to organizational capabilities and deliveries

– Responsible for ultimate results2

Develop learning and knowledge

• Learning at the gemba (“go see for yourself”)– including the costumers

• Scientific method• Coaching• Rapid learning cycles – deep knowledge– standandardization

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Early on suppliers involvement

• Suppliers strong commitment– Pressuposes a new relationship (purchasing, PD,

logistics etc)– Long term and trust relationship

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• d delivered more than a half billion dollars in top line growth while simultaneously implementing 30M in cost savings

• went from 27% programs on time to 90% on time, they reduced cycle time by 70% and increased total throughput and they dramatically reduced waste and executed better launches

• ddelivered more than a 30% increase in smart phone chip performance on an accelerated schedule

• an award winning software company that is revolutionizing the software industry. They have grown profitably since inception. Created many award winning products and joy for employees and customers alike. They have become a veritable lean innovation machine

• s saving an icon with great product

Some results Source: Jim Morgan

THANK YOU!!

ferro@lean.org.br

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