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TRANSCRIPT
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TheDependency Variability Analysis
Business Process
Kevin KohlsPresident – Kohls Consulting
www.kohls-consulting.com
© 2017 Kohls Consulting
The DVA Business Process
• This presentation will address some of the false assumptions in business processes that have become obstacles to many continuous improvement efforts
© 2017 Kohls Consulting
The DVA Business Process
• It can be applied to many areas, but my consulting efforts focus on Throughput, Lead Time, and Inventory, while leveraging Throughput Accounting–This presentation will focus only on Throughput
© 2017 Kohls Consulting
Current Problems• LotsofEffort• Notenoughresults thatmakeadifference• OrdersLatetoCustomers- again• Too much inventory inthewrongplace• No inventory inhighdemandpositions• Prioritiesconstantly changing• Finger pointing andblame• Everything’s“Hot”• Constant firefighting• Chaosandconflict
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© 2017 Kohls Consulting
Trigger Results
BusinessProcess
Astable systemgivesrepeatable results
A Business Habit
☹
😃© 2017 Kohls Consulting
Trigger ResultsAstable systemgivesrepeatable
results
☹
Your Current, Poor Results caused by
Crisis is a Business Process
© 2017 Kohls Consulting
Trigger Results
Dayx + nLateagainToomuchs tockfor mostNos tockforothersFingerpointingPriority’s changedagainEverything’s “Hot”Constant firefightingChaos
Dayx + 3LateagainToomuchstockformostNostock forothersFingerpointingPriority’s changedagainEverything’s“Hot”Constant fire fightingChaos
Dayx + 2LateagainToomuch stockformostNostockforothersFingerpointingPriority’schangedagainEverything’s“Hot”ConstantfirefightingChaos
Dayx + 1LateagainToomuchstockformostNostockforothersFingerpointingPriority’schangedagainEverything’s“Hot”ConstantfirefightingChaos
DayxLateagainToomuchstockformostNostockforothersFingerpointingPriorities changedagainEverything’s“Hot”ConstantfirefightingChaos
Astable systemgivesrepeatable
results
What’s the wrong with the Existing
Business Process?
© 2017 Kohls Consulting
Decisions made in the Business Process Routine happen in a small window of time for most managers.
Constraint – Manager’s Time
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© 2017 Kohls Consulting
Constraint – Manager’s Time
• During this “thin slice” of time, Manager’s “manage”– Priorities– Resources• Engineers, Skilled Trades, IT, etc.
– Budget– Headcount– Resolve Conflicts– Lead, Teach, Learn– Etc.
Limited Resources
© 2017 Kohls Consulting
ALL ofthethingsdemandingamanager’stime
© 2017 Kohls Consulting
Whatmanagersactuallyattempttogetdone
The‘ThinSlice’• SetPriorities• AllocateResources• ResolveConflicts• MakeDecisions• ProvideDirection
Whatmanagersgetdone
ALL ofthethingsdemandingamanagerstime
© 2017 Kohls Consulting
The Illusion of Control• The lack of time drive managers to take actions they
believe will resolve the short term crisis– Do What it Takes!– Take Heroic Actions– Everyone Must Work Harder!– Everyone Must Be Busy and Efficient– Demand Improvement!– Rely on Past Experience & Knowledge to make Decisions
• Putting out today’s fire, only insures that there will be another one tomorrow...
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© 2017 Kohls Consulting
Constraint – Manager’s TimeCRISIS
(of the Day)
IllusionofControl
DayxLateagainToomuchstockformostNostockforothersFingerpointingPrioritieschangedagainEverything’s“Hot”ConstantfirefightingChaos
Manager’s Decisions don’t actually control the Results. Rather, they ensure the Results will be the same with each loop.
Manager’s HOPEthat the Results Tomorrow will be
different than Today
© 2017 Kohls Consulting
Trigger Results
DVABusinessProcess
Dayx + nDemandMetToomuchstockformostNostockforothersFingerpointingPriority’schangedagainEverything’s“Hot”ConstantfirefightingChaos
Dayx + 3DemandMetToomuchstockformostNostockforothersFingerpointingPriority’schangedagainEverything’s“Hot”ConstantfirefightingChaos
Dayx + 2DemandMetToomuchstockformostNostockforothersFingerpointingPriority’schangedagainEverything’s“Hot”ConstantfirefightingChaos
Dayx + 1DemandMetToomuchstockformostNostockforothersFingerpointingPriority’schangedagainEverything’s“Hot”ConstantfirefightingChaos
Dayx• DemandMet• OnTime• NoStockOuts• NoOverstocks• ClearPriorities• Problemsareidentifiedinthefuture
• Collaboration&Teamwork
Astable systemgivesrepeatable
results
Regular meetings
to address future Crisis
Desired State
© 2017 Kohls Consulting
RewardImprovedThroughput
TriggerWeeklyMeeting
FocusedRoutineDVABusinessProcess
• Objective: Clear & Concise• Quantifiable Metric• Necessary Conditions not
compromised
Predicts Future Performance
Team averts crises, Throughput
improves
© 2017 Kohls Consulting
RewardImprovedThroughput
TriggerWeeklyMeeting
BottleneckFocusImproveBottleneck
Analysis
FocusedRoutine
• Objective: Improve Throughput to meet Demand
• Metric: Jobs per Day• NC: Safety
FocusedRoutineDVA
BusinessProcess
Team empowered, has strong lever to
set priorities, improve systems,
and get results
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© 2017 Kohls Consulting
Dependency
Variation
FocusBuffer
Predict
Improve
Target
Actual
Trigger Results
Analysis
Goal&Metrics
© 2017 Kohls Consulting
Hopium Paradigm:ComplexMissionstatement,SiloEfficiencies,andtheHot,Hotter,andOh,Shitparadigm.
DVA Paradigm: The unifying Purpose of the company that resolves conflict helps establish teamwork and establishes trust
System Metrics – Throughput, Inventory, Lead Time, Operating Expense
Goal&Metrics
% % %
Hottest!
Oh, S4!T
© 2017 Kohls Consulting
Dependency
OrganizationoftheManagersoftheSystemthatproducesourProduct
Hopium Paradigm:Managersmanagetheperformanceofthelinksinthesystem
DVA Paradigm: Manage the result of the system, which is dependent on the performance of the links
© 2017 Kohls Consulting
Hopium Paradigm:Everylinkshouldperformaspredicted.Workshouldbebalanced.Novariationisallowed.
DVA Paradigm: The performance of each link will vary over time. Work can not help but be unbalanced in execution. Variation exists.
Variation
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© 2017 Kohls Consulting
Hopium Paradigm:Let’slookathowwearebeingmeasuredtodeterminewhatweshouldworkonnext.Purple?
DVA Paradigm: Here are the results of the weekly analysis that predicts the impact of fixing the issues at the bottleneck link, Light Blue.
Analysis
IncreasedJPH
Demand
© 2017 Kohls Consulting
Hopium Paradigm:Everything’sALWAYSLate-What’stheBIGGESTcurrentcrisisoftheday?(Reactive)
DVA Paradigm: A Predicted Crisis triggers Problem Solving, but they occur less frequently and can be addressed with minimal conflict and chaos
Predict
P-1002EO-004
P-1001P-1002MO-003EO-004SO-005
© 2017 Kohls Consulting
Hopium Paradigm:Takeyourbestguessatwhat’sthehighestpriority– mostlate,volumeofshouting,biggestcustomer,etc.
DVA Paradigm: Analysis creates focus areas for Managers to improve through problem solving
To Do List for “Precious” Resources
FOCUS! Secondary
Focus
© 2017 Kohls Consulting
Hopium Paradigm:Buffersarewasteandshouldbeeliminatedinallareas.Thegoalistoeliminateallvariationandwaste.
DVA Paradigm: Buffers absorb variation (that always exists) and protect the bottleneck, increasing throughput. Buffers that improve throughput are considered “profitable waste.”
There are three types of buffers – capacity, time and inventory.
Designing Buffers into your systems in a critical part of the Analysis Step
Buffer
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© 2017 Kohls Consulting
Hopium Paradigm:Constantlychangingprioritiesasmanagementandleadersfightoverresources.Multi-taskingcausewasteandmakeimplementationtimedragout.
DVA Paradigm: Clear priorities with minimal multi-tasking.
To Do List for “Precious” Resources
FOCUS!
Improve
Hopefor
0
50
100
150
200
250
300
350
1 2 3 4 5 6 7 8 9101112131415161718
Get Improvement
Deeper Dive?© 2017 Kohls Consulting
Hopium Paradigm- DESIRED:Ifyoumandateimprovementeventstobeheldforeveryarea,theywill beheld,andsystemwideimprovementswill result
QuarterlyReviewonCIMetrics
Quota&MetricsMet
Setup&ExecutePlantomeetQuota&Metrics
Hopium Paradigms Extend to the Continuous Improvement “Habit”
Costsarereduced,profits
increase
© 2017 Kohls Consulting
QuarterlyReviewonCIMetrics (Most,Many,Some)
Quota&MetricsMet,butprobablynotintheBottleneckarea
SetupPlanforeachareatomeetQuota&Metricswith
strongincentives
Hopium Paradigm Realization forContinuous Improvement “Habit”
Systemasawholefailstomake
significantbusinessimprovements
Make“incentives”
bigger
Takepartofmanager’s
“ThinSlice”toExecutePlan
Crisis&HotJobsconsume“Thin
Slice”
Fail to Improve, Bottleneck --Fail to improve the System
%% % % % % %
%%
%
Hottest!
Oh, S4!T
The Bottleneck is always the
busiest resource! It always has something to work on and
somewhere to put it!
OR, Throughput goes down while Metrics are met!
© 2017 Kohls Consulting
Starting List (New)
Addicted to Hopium
Availably of Limited
ResourcesPredicted Result?
All of the Things the Manager of the
Limited Resources has to Accomplish
Hopefor
%% % % % % %
%%
%
EachGroupNeedstoShowImprovement
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© 2017 Kohls Consulting
DVA Paradigm: If you focus your resources on the right areas, you will improve throughput, reduce lead times, reduce inventory and improve on-time performance.
RewardImproved__________
TriggerWeeklyMeeting
FocusedRoutineDVABusinessProcess
Astable systemgivesrepeatable
results
Designing the DVA Business ProcessContinuous Improvement “Habit”
© 2017 Kohls Consulting
Here
Goal & Financial
PerformanceThroughput
LeadTime
Inventory
OperatingExpense
DVA Paradigm: Establish a focused routine that is directed at key factors that will lead to profitability and the goal.
The DVA Process That Gets There
It’s no longer a Thinking Process, but a Doing Process for Organizations
RewardImproved__________
TriggerWeeklyMeeting
FocusedRoutineDVABusinessProcess
Astable systemgivesrepeatable
results
© 2017 Kohls Consulting
Solution: Addicted to Success
Thin Slice Likely ResultTo Do List ImpactAnalysis
Dependency
Variation
Analysis
0
50
100
150
200
250
300
350
1 2 3 4 5 6 7 8 9101112131415161718
© 2017 Kohls Consulting
Implementation
RewardImproved__________
TriggerWeeklyMeeting
FocusedRoutineDVABusinessProcess
Astable systemgivesrepeatable
results
TakeyourThinSliceand:• Champion Implementation• Learn andparticipate
• EnoughtoBelieve• Prioritize beingpartof
Routine• Prioritize removing
obstacles• Reinforcethismethod
insteadoffailingbacktotheoldmethods
Expert• Teach• Assure Belief• Pilot• Implement DVA• Find and fix DVA Obstacles• Move from Lead and Teach
to Support
Team• CommittoTraining• CommittotheRoutine
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© 2017 Kohls Consulting
Entrenched Routine
RewardImproved__________
TriggerWeeklyMeeting
FocusedRoutineDVABusinessProcess
Astable systemgivesrepeatable
results
TakepartofyourThinSliceand:• Allocate Resources• ResolveConflicts• ProvideDirection• FollowRoutine– don’t
makeyourselfa“specialexception”
Expert• MovefromInternal
SupporttoPeriodicOutsideSupport
Team• RunRoutine• Strivetoincreasespeedof
routine,minimizetimerequiredinManager’sslice
Are You in a Hopium Paradigm?
You are part of a system that manages:• Links, hoping improving each one
will lead to system improvement• Hope those links have little or no
variability.• Only requires your current
organizational knowledge and experience to operate and improve
And You Get Repeatable Results:• Constant Crisis• Fix Everything Mentality• Constantly shifting priorities• Improvement Process that stops
and starts• Minimal Long Term Improvement
Do You Want to Move to a DVA Paradigm?
You are part of a system that manages:• A System, whose performance is
dependent on the performance of its links
• And those links have variability.• The system is complex enough to
require analysis
You want that analysis to help you:• Proactively Predict a Problem• Create a focus point for your
limited resources• Allow you to set priorities for your
improvement process• Drive results, and establish an
entrench routine
© 2017 Kohls Consulting
Awarding-winningauthorKevinKohls’has
publishedthefirstofthreebusinessnovelsint
he
“AddictedtoHopium”series.Thisbook isfocused
onThroughput,andrevealshowtocreateand
sustainanimprovementprocessfocusedon
improvingthroughput tomeetthedemandof
successfulproducts. Itnotonlytakesafreshloo
k
atimplementingamethod toanalyzeandimprove
throughput,butalsoincludescomponents that
willallowthemethodtobecomea“habit.”These
designedhabitsallowtheprocesstobe
maintainedovermany,manyyears,survivingthe
lossof“processchampions”andthedamagethat
comeswithManagementChurn.
Kohls introducesreaderstotheDependency
VariationAnalysis(DVA)model,whichisused
asthebasisforthisbook. DVAcombinesthe
TheoryofConstraints,simulation,thedesign
ofahabit,andelementsofmotivationintoa
simpleexecutionprocessthatyieldsboth
short- andlong-termsustainableresults.
AddictedtoHopium followsfictionalcharacterAndrewWright,anemployee
ofMegaCo Manufacturing,ashestrugglestomeetthedemanding
requirementsofanew,possiblecustomer.Thecustomerisnotonlylooking
foracommitmentfromMegaCo tomaketheirdemand;heisaskingthemto
proveit throughtheuseofananalysis.Thecust
omerinsiststhatthisanalysis
takeasystemviewpointandincludevariation.ButMegaCo isaddictedto
Hopium.Theymakewhateverpromisethatisneededtogetthepurchase
orderandthenhope theycanmakethatpromise.Whichtheyrarelydo.How
canAndrewbreakthisaddictionandhelpMegaCo securethecontra
ctand
keeptheirpromise?
Aformerautomotiveexecutive,Kohls’premierexampleistheThroughput
ImprovementProcess,whichhedevelopedatanassemblyplantin1987.
Surprisingly,thisprocessisstillinplacethirtyye
arslater,becomingnotonly
thetemplateforcurrentproduction improvement,butthebasisforde
signing
andvalidatingfuturesystemsacrossthisglobalauto
motivemanufacturer.
Addicted to Hopium- Throughput
Kevin Kohls
Using the DVA Business Process
to Break the Guesswork Habit
Kevin Kohls
Throughput
Addictedto Hopium
To find out more about DVA, and how to improve Throughput, pick up a copy of Addicted to Hopium – Throughput on Amazon.
Contact us directly at:[email protected] or248-931-1959
www.kohls-consulting.com