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© 2011 Institute for Operational Excellence. All Right Reserved.Real Business Results fromAchieving Operational Excellence...
© 2012 Institute for Operational Excellence. All Right Reserved.The following case studies are presented in the Shingo awa...
© 2012 Institute for Operational Excellence. All Right Reserved.Message from the author:“While lean is about eliminating w...
© 2012 Institute for Operational Excellence. All Right Reserved.“Each and every employee can see the flow ofvalue to the c...
© 2012 Institute for Operational Excellence. All Right Reserved.Eight Steps to AchieveOperational Excellence1. Design a le...
IDEX CORPORATIONCase Study 1
© 2012 Institute for Operational Excellence. All Right Reserved.About IDEX• Global presence with more than 40 sites andope...
© 2012 Institute for Operational Excellence. All Right Reserved.Manufacturing at IDEX
© 2012 Institute for Operational Excellence. All Right Reserved.• In 2005, IDEX began a program of OperationalExcellence.•...
© 2012 Institute for Operational Excellence. All Right Reserved.Growth in IDEX’s Served Markets (2010)% Growth(2010)BRICU....
© 2012 Institute for Operational Excellence. All Right Reserved.• Micropump had to deal with: A high mix of products Mul...
© 2012 Institute for Operational Excellence. All Right Reserved.• Employees who built the product learned to correctabnorm...
© 2012 Institute for Operational Excellence. All Right Reserved.“You have to earn the right to innovate with yourcustomers...
© 2012 Institute for Operational Excellence. All Right Reserved.Micropump Offense MeterInnovation Time
© 2012 Institute for Operational Excellence. All Right Reserved.Flow for Innovation Prior to OpExIdeasNew ProductsOperatio...
© 2012 Institute for Operational Excellence. All Right Reserved.IdeasNew ProductsOperationsOperationsintegrated withInnova...
© 2012 Institute for Operational Excellence. All Right Reserved.• Established an innovation process driven by directcustom...
© 2012 Institute for Operational Excellence. All Right Reserved.%Growth(2010)MicropumpMkt. Avg.Micropump Growth (2010)(4x)
© 2012 Institute for Operational Excellence. All Right Reserved.% Increasein revenuefrom newproductsandmarketsMicropump 20...
© 2012 Institute for Operational Excellence. All Right Reserved.% Increasein timespent oninnovationMicropump 2009Micropump...
© 2012 Institute for Operational Excellence. All Right Reserved.% Increase indollars in theinnovationfunnelMicropump2009Mi...
© 2012 Institute for Operational Excellence. All Right Reserved.Part supplierSolution providerRohnert Park - an IDEX facil...
© 2012 Institute for Operational Excellence. All Right Reserved.Rohnert Park – Operations managementgrows the business by ...
© 2012 Institute for Operational Excellence. All Right Reserved.Rohnert ParkOak Harbor, WABristol, CTMiddleboro, MAVancouv...
© 2012 Institute for Operational Excellence. All Right Reserved.%Growth(2010)RohnertParkMkt. Avg.Rohnert Park Growth (2010...
© 2012 Institute for Operational Excellence. All Right Reserved.%Growth(2011)RohnertPark2010Rohnert Park Growth (2011)Rohn...
© 2012 Institute for Operational Excellence. All Right Reserved.% Increasein salesfrom newsystemsandproductsRohnertPark200...
HYPERTHERMCase Study # 2
© 2012 Institute for Operational Excellence. All Right Reserved.
© 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm Products
© 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm products and markets40 kW oxygen plasma arc cut...
© 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm Size and LocationForty-two years after it’s fou...
© 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm Sales 2002 – 2008330% growth, about 28% compoun...
© 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm Sales 200950% drop in daily sales rate
© 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm Sales 2011 (Through Q1)By working on offense, r...
© 2012 Institute for Operational Excellence. All Right Reserved.• Hypertherm’s brand name is superior do to theirtechnolog...
© 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm is a very unique company. While itmanufactures ...
© 2012 Institute for Operational Excellence. All Right Reserved.Typical U.S. Supply Chain and Market95%= supply chain deli...
© 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm Supply Chain and Sales37%12%27%24%97% of supply...
© 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm has strived to create a factory where eachassoc...
© 2012 Institute for Operational Excellence. All Right Reserved.OpEx at HyperthermA Team leader at Hypertherm will spend h...
© 2012 Institute for Operational Excellence. All Right Reserved.OpEx results at HyperthermWhat they don’t spend time on:•S...
© 2012 Institute for Operational Excellence. All Right Reserved.OpEx results at Hypertherm• Sales continue to grow, they a...
© 2012 Institute for Operational Excellence. All Right Reserved.Best Place to Work – Med. Size Companies
© 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm OpEx Strategy“We look for Operational Excellenc...
© 2012 Institute for Operational Excellence. All Right Reserved.To Learn MoreVisit the Institute for Operational Excellenc...
© 2012 Institute for Operational Excellence. All Right Reserved.Further Reading
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Real Business Results from Achieving Operational Excellence

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Author Kevin Duggan presents two operational excellence case studies from his latest award winning book. Learn how Hypertherm and IDEX utilized the principles of operational excellence to achieve sustained business growth.

Published in: Education, Business, Technology
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Real Business Results from Achieving Operational Excellence

  1. 1. © 2011 Institute for Operational Excellence. All Right Reserved.Real Business Results fromAchieving Operational ExcellenceKevin Duggan, FounderInstitute for Operational Excellencewww.instituteopex.org
  2. 2. © 2012 Institute for Operational Excellence. All Right Reserved.The following case studies are presented in the Shingo awardwinning book Design for Operational Excellence: ABreakthrough Strategy for Business Growth by Kevin J. Dugganand published by McGraw-Hill.
  3. 3. © 2012 Institute for Operational Excellence. All Right Reserved.Message from the author:“While lean is about eliminating waste and creatingvalue stream flow, Operational Excellence is aboutleveraging operations for top line business growth. It isachieved by creating value stream flow that “self-heals” when the flow goes abnormal; withoutmanagement. The end result: management is free tospend time working on ‘offense’ or activities that growthe business. It all sounds great theoretically, but havecompanies done this in real life? The answer is yes,companies have achieved amazing top line growth in adown economy by applying the principles ofOperational Excellence. The following two casestudies are excellent examples of how an operationthat thrives on Operational Excellence can impact topline business growth.”~Kevin J. Duggan
  4. 4. © 2012 Institute for Operational Excellence. All Right Reserved.“Each and every employee can see the flow ofvalue to the customer, and fix that flow before itbreaks down.” SMKevin J. DugganOperational Excellence
  5. 5. © 2012 Institute for Operational Excellence. All Right Reserved.Eight Steps to AchieveOperational Excellence1. Design a lean flow using lean guidelines2. Implement a lean flow3. Make the lean flow visual4. Create standard work for the lean flow5. Make abnormal flow visual6. Create standard work for the abnormal flow7. Teach employees to maintain and improve theflow to the customer8. Free management to work on offense
  6. 6. IDEX CORPORATIONCase Study 1
  7. 7. © 2012 Institute for Operational Excellence. All Right Reserved.About IDEX• Global presence with more than 40 sites andoperations on every continent.• 2010 annual sales topped $1.5 billion. Sales approached $2 billion in 2011.• Employs more than 6,000 people.
  8. 8. © 2012 Institute for Operational Excellence. All Right Reserved.Manufacturing at IDEX
  9. 9. © 2012 Institute for Operational Excellence. All Right Reserved.• In 2005, IDEX began a program of OperationalExcellence.• Designed Flow and Mixed Model lean were keyenablers.• In 2008, Commercial Excellence was linked toOperational Excellence.• Strategy, innovation, goal deployment, and valueselling are at the heart of Commercial Excellence.OPEX and COMEX drive GROWTHImprovement at IDEX
  10. 10. © 2012 Institute for Operational Excellence. All Right Reserved.Growth in IDEX’s Served Markets (2010)% Growth(2010)BRICU.S./Europe IDEX510154%7-10%12%organic14%overall
  11. 11. © 2012 Institute for Operational Excellence. All Right Reserved.• Micropump had to deal with: A high mix of products Multiple shared resources• They used formal principles and processes to createflow in these areas and to distinguish betweennormal and abnormal flow.Micropump - an IDEX facility
  12. 12. © 2012 Institute for Operational Excellence. All Right Reserved.• Employees who built the product learned to correctabnormal flow• Flow of the product became seamless to thecustomer• Customers very happy with products and services• Operations management now moves on to work onOffenseMicropump
  13. 13. © 2012 Institute for Operational Excellence. All Right Reserved.“You have to earn the right to innovate with yourcustomers!”~ President, MicropumpEarning the Right to Innovate
  14. 14. © 2012 Institute for Operational Excellence. All Right Reserved.Micropump Offense MeterInnovation Time
  15. 15. © 2012 Institute for Operational Excellence. All Right Reserved.Flow for Innovation Prior to OpExIdeasNew ProductsOperationsR & DEngineeringSales &MarketingInnovationDebug
  16. 16. © 2012 Institute for Operational Excellence. All Right Reserved.IdeasNew ProductsOperationsOperationsintegrated withInnovationR & DEngineeringSales &MarketingFlow for Innovation After OpEX
  17. 17. © 2012 Institute for Operational Excellence. All Right Reserved.• Established an innovation process driven by directcustomer contact.• Design new products (pumps) which reducedcomponents in the customer’s assembly.• Created a differentiated product.• Example: Micropump supplied a product thatreduced the system cost for their customer by40%.Micropump – Process
  18. 18. © 2012 Institute for Operational Excellence. All Right Reserved.%Growth(2010)MicropumpMkt. Avg.Micropump Growth (2010)(4x)
  19. 19. © 2012 Institute for Operational Excellence. All Right Reserved.% Increasein revenuefrom newproductsandmarketsMicropump 2009Micropump New Products & Markets Revenue+162%Micropump 2010
  20. 20. © 2012 Institute for Operational Excellence. All Right Reserved.% Increasein timespent oninnovationMicropump 2009Micropump Innovation Time+125%Micropump 2010
  21. 21. © 2012 Institute for Operational Excellence. All Right Reserved.% Increase indollars in theinnovationfunnelMicropump2009Micropump Innovation Funnel Dollars+240%Micropump2010
  22. 22. © 2012 Institute for Operational Excellence. All Right Reserved.Part supplierSolution providerRohnert Park - an IDEX facility
  23. 23. © 2012 Institute for Operational Excellence. All Right Reserved.Rohnert Park – Operations managementgrows the business by working with otheroperations management in differentdivisions to provide solutions to customers
  24. 24. © 2012 Institute for Operational Excellence. All Right Reserved.Rohnert ParkOak Harbor, WABristol, CTMiddleboro, MAVancouver,WACustomerSolutionTime spent on offense.Time spent on
  25. 25. © 2012 Institute for Operational Excellence. All Right Reserved.%Growth(2010)RohnertParkMkt. Avg.Rohnert Park Growth (2010)(3x)
  26. 26. © 2012 Institute for Operational Excellence. All Right Reserved.%Growth(2011)RohnertPark2010Rohnert Park Growth (2011)RohnertPark2011+20%
  27. 27. © 2012 Institute for Operational Excellence. All Right Reserved.% Increasein salesfrom newsystemsandproductsRohnertPark2009Rohnert Park New Systems SalesRohnertPark2010+50%
  28. 28. HYPERTHERMCase Study # 2
  29. 29. © 2012 Institute for Operational Excellence. All Right Reserved.
  30. 30. © 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm Products
  31. 31. © 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm products and markets40 kW oxygen plasma arc cutting
  32. 32. © 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm Size and LocationForty-two years after it’s founding, Hypertherm, Inc. remainslocated in Hanover, New Hampshire and 10 facilities totaling over300,000 ft2(27,500 m2).
  33. 33. © 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm Sales 2002 – 2008330% growth, about 28% compound annual growth rate over 6yearsStarted OpEx journey in 2003
  34. 34. © 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm Sales 200950% drop in daily sales rate
  35. 35. © 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm Sales 2011 (Through Q1)By working on offense, recovery occurring faster than anticipated(and growing). Note – there were no layoffs at any time
  36. 36. © 2012 Institute for Operational Excellence. All Right Reserved.• Hypertherm’s brand name is superior do to theirtechnology and performance• The technology of its products is ahead of itscompetitors• Hypertherm’s offense time is spent on technologydevelopment and penetrating new marketsTechnologyDevelopmentHypertherm Offense Meter
  37. 37. © 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm is a very unique company. While itmanufactures 97% of its product in the U.S. (within200 miles of Hanover, New Hampshire) – It sellsover 60% into other countries, including 24% intolow cost countries.It is estimated that less than ½ of 1% of themanufacturing companies in the U.S. do this.OpEx at Hypertherm
  38. 38. © 2012 Institute for Operational Excellence. All Right Reserved.Typical U.S. Supply Chain and Market95%= supply chain delivery
  39. 39. © 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm Supply Chain and Sales37%12%27%24%97% of supply chain within 150 miles
  40. 40. © 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm has strived to create a factory where eachassociate can tell if the flow is normal or abnormal. Theirgoal is to have the factory run autonomously, withoutmanagement intervention. Operations management spendstheir time on growth activities such as setting up operationsand distribution into new markets, working with sales onacquisitions, and more. They do not spend anytime on thedelivery of customer orders.OpEx at Hypertherm
  41. 41. © 2012 Institute for Operational Excellence. All Right Reserved.OpEx at HyperthermA Team leader at Hypertherm will spend her day:•With Sales people planning customer orders anddelivery•In Training•Training her team•Assist engineering in manufacturing new products•Jumping in on the line to assist if flow start to be comeabnormal
  42. 42. © 2012 Institute for Operational Excellence. All Right Reserved.OpEx results at HyperthermWhat they don’t spend time on:•Sitting in status or update meetings•Expediting•Chasing parts•Chasing information•Talking with production control – as there is not aproduction control department at Hypertherm!
  43. 43. © 2012 Institute for Operational Excellence. All Right Reserved.OpEx results at Hypertherm• Sales continue to grow, they are acquiring companies andimplementing their Op Ex principles into these new acquisitions.• In 2012, HT went from 1,000 associates to 1,300 associates.• Their growth has caused the local labor market for machinists to‘dry up’, but rather than outsource, they built the HyperthermTechnical Training Institute (HTTI) and trained local peopleproviding more jobs to the community• Hypertherm has not laid off any associates since they beganoperations over 40 years ago.• Constructed a brand new, state of the art manufacturing facility,opened in 2013.• Named “Best company to work for in the U.S.” for 5 years!
  44. 44. © 2012 Institute for Operational Excellence. All Right Reserved.Best Place to Work – Med. Size Companies
  45. 45. © 2012 Institute for Operational Excellence. All Right Reserved.Hypertherm OpEx Strategy“We look for Operational Excellence to provide us with a competitiveadvantage.”~ Evan Smith, General Manager, Hypertherm“Operations aren’t a fundamental business problem. [It] gets time; it’s notignored. It’s not like we don’t want to talk about it. It’s that we don’thave to talk about it.Going forward, we’re going to keep pushing the envelope for howautonomous our operations can be in terms of not relying onmanagement for their day-to-day functioning.”~ Jim Miller, Vice President of Manufacturing, Hypertherm
  46. 46. © 2012 Institute for Operational Excellence. All Right Reserved.To Learn MoreVisit the Institute for Operational Excellence atwww.instituteopex.orgFree membership provides access to articles, videos,podcast and more.
  47. 47. © 2012 Institute for Operational Excellence. All Right Reserved.Further Reading

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